NUNC COGNOSCO EX PARTE
TRENT UNIVERSITY
LIBRARY
HUGO STINNES
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HUGO STINNES
By
HERMANN BRINCKMEYER
TRANSLATED FROM THE GERMAN BY
ALFRED B. KUTTNER
NEW YORK
B. W. HUEBSCH, Inc.
MCMXXI
Copyright, 1921, by
B. W. Huebsch, Inc.
Print ed in U. S. A.
CONTENTS
chap. page
INTRODUCTION . VU
I. THE PERSONALITY OF HUGO STINNES . I
II. HIS ANCESTORS . . 14
III. HIS FIRST ENTERPRISES . 29
IV. HIS PART IN THE WORLD WAR .... 50
V. THE MINING TRUST: THE RHINE-ELBE-
UNION . 56
VI. THE ELECTRO-MINING TRUST: THE SIE¬
MENS - RHINE - ELBE - SCHUCKERT -
UNION . 64
VII. STINNES’ AFFILIATIONS IN GERMANY AND
ABROAD . 83
VIII. STINNES AND THE NEWSPAPERS . . . 102
IX. STINNES IN THE PUBLIC EYE .... IO9
X. STINNES AND THE SOCIALIZATION OF
INDUSTRIES . 127
XI. THE SIGNIFICANCE OF STINNES IN GERMAN
ECONOMIC DEVELOPMENT .... I34
139600
INTRODUCTION
There is a vast difference of opinion in
Germany about Hugo Stinnes, but his
name is on everybody’s lips and his activ¬
ities are the subject of constant discus¬
sion.
For many people he is an idol, for others
he is a terror abroad in the land. The so¬
cialists of the Vorwärts look upon him as a
necessary product of evolution and a path¬
finder for the state of the future. According
to Marxian theory, he is converting cap¬
italism into the cocoon stage from which
the finished butterfly of socialistic collec¬
tivism will some day emerge. He should
therefore not be disturbed in his activities!
Socialists may yet come to appreciate him
VII
INTRODUCTION
as one of their greatest figures. Socialists
of a different persuasion regard him as a
loathsome vampire of the proletariat. W.
von Moellendorf suspects Stinnes of being an
opportunist emancipated from all moral
considerations, whereas Walter Rathenau
characterizes him as a particularistic indus¬
trial baron whose work is destroying the
present system as a step towards collectiv¬
ism. Sentimental Rhinelanders speak of
“Hugo” with the same respectful famili¬
arity with which the Israelites may have
used the name of their leader in the desert.
And undoubtedly many a simple soul pic¬
tures this enigmatic man as a just and stern
patriarch.
Stinnes is certainly no fine phrase-maker
or dreamer. He is never idle. While thou¬
sands of brain and manual workers are
standing by in despair, and thousands of
the most intelligent leaders are endlessly
discussing what kind of cement should be
used in the reconstruction of Germany,
this man, calm and unconcerned, is building
viii
INTRODUCTION
what may be either an edifice of steel des¬
tined to outlast time, or a Babylonian
Tower that will plunge the builders into
confusion.
HUGO STINNES
CHAPTER I
THE PERSONALITY OF HUGO STINNES
Hugo Stinnes has reached the age of fifty.
He has the appearance of a worker and
could go about in the clothes of a foreman
or a miner without attracting attention.
He is like a piece of coal wandering about
among his own coal mines.
His thick head is set upon a stocky trunk.
His black hair is cut close, the face is pale
and expansive, the beard is black as coal,
the nose is curved and the eyes are heavily
underlined. A German paper recently
called him the “Assyrian King.”
His external appearance is devoid of pose,
he seems heavy and solid. He walks with a
HUGO STINNES
slight stoop and shuffles along like a sailor.
Clothes, habits and bearing denote a man
of simple tastes. “His pale face, his rather
tired eyes and his modest clothes make him
look more like a labor secretary than a Ger¬
man Rockefeller” — to quote a French re¬
porter who saw him in Spa.
Stinnes never stops working. It would
certainly be a mistake to assume that he is
driven by personal ambition, or money
greed, or considerations of public welfare.
Anyone who knows the captains of industry
of the Rhine-Westphalian district in their
own bailiwick, will understand him. These
men have an irresistible impulse to do cre¬
ative work. They are the engineers who
organize human activity for constructive
work; they know their building material
through and through, and often go on
scheming and figuring in their sleep, while
dreaming about new combinations. These
dyed-in-the-wool industrial leaders know
nothing of rest, luxury, or enjoyment.
They live and toil in the simplest surround-
2
HUGO STINNES
ings. Even in their rare moments of leisure
they have a preoccupied air, as if their
minds were busy with problems. One can¬
not imagine men like Thyssen, Klöckner,
Kirdorf or Stinnes at a cabaret. Nor will
you find them in the false heroic pose of the
period of Kaiser Wilhelm’s romanticism. It
is interesting to know that these men can
drive through the workingmen’s quarters in
their automobiles without causing resent¬
ment. The laboring classes have an infal¬
lible instinct for workers and drones. Even
the most radical class antagonist realizes
that there is something more in men like
Stinnes than the impulse to exploit, and the
desire for luxury. Otherwise it would be
inexplicable that even during the most agi¬
tated periods of revolutionary disturbance
in the industrial section, no weapon has
ever been raised against them.
These men are noted for their practical
point of view. This is the source of their
strength. Their nerves are fresh and are
not influenced by emotions. But this ex-
3
HUGO STINNES
elusive devotion to practical considerations
is also a source of weakness. These men
lead a life of strict routine, and are chained
to their work like convicts; they are out of
the ordinary run and therefore they stand
apart; they are the victims of their destiny.
Many pages of the book of life are closed to
them, though they are the rulers of life.
No power of will can carry them beyond
the walls which their own labors have
built around them. They have no leisure
and do not become patrons of the arts.
Nor do they aspire to the fame of a Mae¬
cenas.
For what do these men toil? By this
time Hugo Stinnes has made a large for¬
tune which is increasing from day to day;
his power and his influence are incalculable.
Even if he could take the time for it, he
would find it impossible to spend all his
wealth and enjoy it. But these men do not
even take the time for rest which every
other laborer claims. Thyssen, an old
man of almost eighty years, rides to his
4
HUGO STINNES
office every morning at eight o’clock, in
a street car, shoulder to shoulder with
his own workmen. It is quite possible
that these men never stop to think why
they work.
Not long ago a foreman rode home with
Stinnes at the end of a strenuous day. In
the course of the conversation he asked
him: “Tell me, Mr. Stinnes, why do you
still work so hard?” Stinnes gave him a
peculiar look and said: “For my children.”
Surely a curious answer! Did Stinnes
mean it ironically, as a challenge to this in¬
quisitive union man? Or was he uncon¬
sciously expressing the dynastic feeling of a
family that has now been in the saddle for
three generations? We know the impor¬
tance which Hugo Stinnes attributes to
the family, and especially to a family such
as his. The unusual demands which he
makes upon his relatives show that he
expects them to live up to the family tra¬
dition.
The present activities of Hugo Stinnes
5
HUGO STINNES
can hardly be surveyed. His associates are
numerous and include men of great energy,
experience, and efficiency. Some of them
have had life-long experience in the man¬
agement of great organizations, but Stinnes
always remains in control.1 It is note¬
worthy that his oldest son, Hugo, who may
prove to be a greater business genius than
his father, is developing an unusually inde¬
pendent initiative.
The personal fortune of Hugo Stinnes
has been the subject of many conjectures,
some of which are quite exaggerated. But
we must not forget that the organizations
which belong to him personally are rela¬
tively few in number compared to the nu¬
merous stock companies, participation com¬
panies, and family companies, which are
included in the Stinnes Trust.
Hugo Stinnes has a genius for being de¬
tached and practical. Not only does he
control his own organization with the
1 The Red Flag, a socialist paper, recently published a poem
which represents Stinnes in complete control of German indus¬
try, German business talent, and German politics.
6
HUGO STINNES
highest mathematical intelligence, but he
also has a sure instinct for practical com¬
binations in every sphere of business. He
recognizes economic possibilities with far-
reaching implications while others still ig¬
nore them. He does not go in for over-
ingenious schemes; he is always construc¬
tive. He can reverse his position at any
moment without running the risk of dis¬
organizing his work. These characteristics
alone, however, would not be sufficient to
make him a power in the Germany of to¬
day. There is the added factor that, in
times when others lack will-power, his de¬
termination is firm; that in the midst of
general instability, he has managed to re¬
main unshaken. His poise and confidence
are a part of his character and do not have
to be paraded in public.
This is the secret of his power of sugges¬
tion over everybody with whom he comes
in contact. Hence also the secret of his
control of men and circumstances. His at¬
titude towards labor and labor leaders is
2 7
HUGO STINNES
peculiar to himself. His relations with the
unions are conducted in a brusque tone.
He does not take offense at unvarnished
truths or even at downright rudeness, if it
is honestly meant. As soon as he perceives
that his opponent has a clear and succinct
point of view, he is open to argument. He
openly attacks mere tactics or else ignores
them altogether. He is not friendly to
theories. Occasionally he does not mind
listening for an hour or so to a theorist.
He likes to analyze and refute unsound
theories, in the very act of listening to them.
He thinks in economic terms. When he
proposes to have his employees participate
in an enterprise by taking shares in it, he
is guided by the thought of enlisting hither¬
to unutilized energies. In his socialistic
projects, his idea is to have business benefit
from the participation and joint respon¬
sibility of labor. Nevertheless he is a busi¬
ness aristocrat. This may be due to the
fact that he does not feel that the period of
collectivism has arrived, and because he
8
HUGO STINNES
knows that formal democracy breaks down
in actual human relations, or perhaps he
cannot help himself. As long as there is a
general belief that reforms can be brought
about by the mere fiat of theorists, he will
probably continue to subject every new
theory to the acid test of practical appli¬
cation.
During the recent debate in Germany
about socializing all industries, Stinnes was
frequently consulted. His position was
that he did not reject collectivism but ob¬
jected to having it established by decree.
He did not dispute the theory but openly
stated his conviction: “As regards the
form of collectivism, you will always have
to adapt yourselves to previous experience.
Under no circumstances must you under¬
estimate the importance of the individual.”
He always proceeds from the simplest ex¬
perience: “When I am about to start a
new enterprise I always ask two preliminary
questions . In the first place, where is the
man to organize it? Secondly, where are
9
HUGO STINNES
the efficient workmen? If these two requi¬
sites are lacking, I keep my hands off.
This way of looking at the problem
will have to be observed in the future.
You must leave to the organizer what
is the organizer’s business — leadership.
And you must see to it that labor gets a
fair reward and a good living out of the
enterprise.”
Up to the present, the debate about so¬
cializing industries has not been able to
solve this problem in any other way. Le-
gien, the deceased leader of the German
socialist unions, who had been in favor of
putting socialism into practice immediately,
arrived at the same conclusion, and ac¬
knowledged that the interests of both em¬
ployer and employee must be consulted.
In a conversation with Stinnes he once
expressed himself as follows: “It is a pity
that we did not get to know each other
years ago; in that case many things in the
labor movement and in industry might have
turned out differently.”
io
HUGO STINNES
Stinnes has a remarkable influence upon
public opinion, yet he seldom appears in
public. His recent purchase of a string of
newspapers, which will be discussed later
on, led many people to surmise that he was
looking for a means of expressing his point
of view. But his acquisition of plants
covering the whole scale of production,
from cellulose factories and paper mills, to
printing establishments and publishing
houses, would seem to indicate that he is
more concerned with a large economic con¬
solidation.
On one occasion, namely at the Spa con¬
ference, Stinnes did make a public declara¬
tion. He attended the conference as an
expert, and read his opinion about the coal
situation from a manuscript, in a high weak
voice which was in curious contrast to his
robust appearance. When he referred to
certain individuals being “afflicted with the
incurable illness of victory,” he was cau¬
tioned by the chairman of the conference
to moderate his words. Stinnes merely
HUGO STINNES
looked up briefly from his manuscript and
replied: “I am not here for the sake of
being polite.” His speech, which attracted
wide attention, expressed his conviction
that the reparation problem was a problem
of European economics which could be
solved only through the full cooperation
of both the victors and the vanquished.
Stinnes was speaking in terms of strict
economic necessity, and his words echoed
harshly in the rarefied atmosphere of diplo¬
macy, tactics, and psychological subtleties
which pervaded Spa.
The men of the Stinnes family have al¬
ways clearly foreseen the steps of industrial
evolution. Their efforts have decisively in¬
fluenced economic development. To attain
a correct estimate of Hugo Stinnes and his
significance — for he is a force to be reck¬
oned with — it is necessary to trace the en¬
terprises of his family as well as his own
earlier projects. Those who bear the name
of Stinnes have never been communicative
and have developed no theories. For that
HUGO STINNES
reason it is much more interesting and
important to observe what they have done
than to listen to what they have had to
say.
CHAPTER II
HIS ANCESTORS
The history of the Stinnes family reflects
a century’s development of the Rhine-
Westphalian industrial section, and with
it of German economic history. The Ger¬
man development from the eighteenth to
the nineteenth century was marked by
political dissension, cramped economic con¬
ditions, small scale production, and petty
politics among the guilds. But it was not
long before the waves of political and
economic upheaval swept over the country
from the west, while technical advances in
science and manufacture were making their
first appearance in obscure workshops and
laboratories.
Despite the system of small states, the
Rhine -Ruhr district was already an eco-
14
HUGO STINNES
nomic unity at the beginning of the nine¬
teenth century. Coal, iron, and water
transportation formed the basis of indus¬
trial development. Steel from the famous
Berg district, woolen goods from the manu¬
facturing centres, silks and linens from the
industrial centres of the Rhine were known
in every country. To this day the saws of
Remscheid, the locks of Velbert, the rivets
of Altena, and the steel-ware of Solingen,
have a traditional reputation throughout
the world.
The northwestern part of Germany was
the logical place for the development of
industrial leaders. Krupp, Thyssen, Kir¬
dorf, Haniel, and Stinnes, all developed
into captains of industry with the aid of
coal and iron. Their opponents, the most
important representatives of modern so¬
cialism, also grew up in this region. Karl
Marx was born in Treves, at the junction
of the Saar and the Rhine, Frederick
Engels hails from the thriving Wupper
valley, Bebel’s cradle stood in the suburbs
iS
HUGO STINNES
of Cologne, and Lassalle, coming from the
eastern part of Germany, reached the height
of his career in the Rhine district.
In the year 1808, Mathias Stinnes, the
son of a shipping man who had gone into
the transportation business on the Ruhr,
made himself independent in Mülheim.
Hardly eighteen years old, precocious, dar¬
ing and determined, he was a genuine off¬
spring of the district, having grown up in
the midst of the coal fields and within sight
of the Rhine, the oldest highway of com¬
munication in Europe. At that time just
as at present, the French, whose revolu¬
tionary passion had been skillfully deflected
into ambitious dreams of expansion by
Napoleon, occupied the left bank of the
Rhine. French rule brought about im¬
portant changes in the Rhine lands. Petty
politics and shortsighted economic policies
had obstructed the Rhine at innumerable
places, until the river, including the high¬
ways running along its banks, was little
more than a prolific source of revenue for
16
HUGO STINNES
the states that bordered upon it. From
Bingen to Bonn a merchant had to cross
the border eight times, and from Germers¬
heim to Rotterdam one had to pay duty at
no less than 32 stations. At that time the
abolition of duties and border restrictions
was already under way, but the period of
the Continental blockade soon intervened.
Export on any large scale was restricted
and the importation of raw materials was
heavily penalized. It was of little benefit
to Mülheim on the Ruhr to receive the
status of a city from the French, in 1808.
The atmosphere was not cleared until 1815,
when the Congress of Vienna decided to
incorporate the city with Prussia.
Thus, Mathias Stinnes had no easy time
of it when he formed his company. On the
Ruhr, it is true, he was not handicapped so
much by existing conditions as on the
Rhine. He bought his first coal barge, to¬
gether with a quantity of coal, in 1810 for
the price of 1240 German dollars. During
the next decade he bought additional coal
17
HUGO STINNES
mines on the Ruhr. Soon after, his barges
were to be seen on the Rhine. In 1817
Mathias Stinnes was already opening the
important shipping line from Cologne to
Rotterdam, with a regular service of nine
of his own ships. At the same time he
began to construct his own equipment; he
built his ships in his own yards. From
then on the firm expanded rapidly. By
1820, Mathias Stinnes owned 66 coal barges
on the Rhine and the Ruhr, which plied
regularly upstream on the Rhine to Bonn
and Coblenz, and downstream to the Dutch
maritime ports.
This was bound to lead to an expansion
of the field of activity. The barges which
took the coal north and south from Mül¬
heim were loaded with colonial goods in
Holland, and with salt in Wesel, from the
royal reservation; from the Ruhr district
they brought ironware and textiles as well
as coal, and were loaded at the upper Rhine
for the down trip with wine, dry vegetables,
grain, and ores. Mannheim, which to-day
18
HUGO STINNES
is the reloading station for American grain,
was at that time the shipping port for Ger¬
man grain destined for America.
For a long time this shipping business
had to contend with various obstacles.
The right to launch ships on the Rhine,
and the freight rights of the Rhine ports
were still restricted, and the navigation
guilds exercised various monopolies. The
Rhine navigation acts, which were unified
in 1831 at Mainz, finally established free¬
dom of communication on the Rhine.
Mathias Stinnes contributed to no small
extent to this improvement by taking
things into his own hands and by presenting
clever petitions to the authorities. There
were most amusing controversies between
the astute and farsighted shipping bosses of
Mülheim, the “subject” Stinnes, and the
bureaucratic officials of some of the govern¬
ment posts. Nor did Mathias Stinnes hesi¬
tate to undertake the complicated journey
to Berlin whenever his interests required it.
He is said to have had the same gift for over-
19
HUGO STINNES
awing government officials with which his
grandson, Hugo Stinnes, is credited to-day.
By 1831 the navigation acts had cleared
the Rhine for Mathias Stinnes. The out¬
put at the mines, as well as the whole busi¬
ness of the district, immediately experi¬
enced a substantial increase through the
opening up of a dependable market for all
products as far as the territory of the upper
Rhine and the Main. Mathias Stinnes
made close connections with Mainz, Frank¬
furt, Worms, Mannheim, Karlsruhe, and
Strassburg. He even did not hesitate to
send his ships from the Rhine to Stettin
and Hamburg, by way of the open sea.
His enterprising spirit proved especially
helpful to Mülheim when, together with
Hugo Haniel, he undertook the develop¬
ment and equipment of the port facilities.
He also built the pontoon bridges at Cob¬
lenz and Düsseldorf.
But his main interests continued to cen¬
tre in the Rhine. As late as the forties,
ships on the river were worked by means
20
HUGO STINNES
of hand- and horse-power, while downstream
they drifted with the current. Sails could
rarely be used. Though an occasional
steamer had plied the Rhine before Stinnes’
time, he was the first to use a real tug, and
thus initiated the important Rhine freight
service. It is worth mentioning that at
that time the Exchequer held a long and
circumstantial debate about the pros and
cons of a state towing monopoly. This
plan was debated interminably, until no¬
body any longer believed that it could be
carried out. In the meanwhile, Mathias
Stinnes ordered his first steam tug from
the shipyards of Ditchborne & Marie, in
London. The first Stinnes steamer plied
on the Rhine in 1843. The Stinnes fleet
remains to-day the biggest and most im¬
portant fleet on the Rhine.
It was soon found that the first tug was
not powerful enough. A second tug, built
in Holland and christened “Mathias Stin¬
nes I,” became the head of a fleet of power¬
ful tugs.
21
HUGO STINNES
At first there was considerable opposi¬
tion to the use of steam power on the
Rhine, as shown by an incident which oc¬
curred in 1848, when the tug “Mathias
Stinnes I” had just begun its Rhine serv¬
ice with a fleet of barges in tow. There
had been great excitement among the
peasants and teamsters of the middle
Rhine, who usually took charge of the
ships at Cologne to tow them to the mines.
They felt keenly the decrease in their
earnings on account of the use of the tugs,
and one day they decided to take matters
into their own hands. It was secretly
whispered about that something extraor¬
dinary was about to take place on the
Rhine at Neuwied. The peasants and
teamsters from the village of Weissenturm
opposite Neuwied had conspired to set up
a number of mortars and small cannon
along the waterfront at Neuwied. When
the tug came along with its barges in tow,
a loud bombardment took place that raised
the echoes from the neighboring moun-
22
HUGO STINNES
tains. The whole Rhine was thickly cov¬
ered with clouds of smoke.
The inhabitants of Weissenturm hoped
that at such a reception the hated tug
would at once cut loose from its haul, and
turn about face, never daring to come up
from Mülheim again. But the conspiracy
must have come to the ears of the captain,
for the pilot house had been closely barri¬
caded with iron plates, and not a soul was
to be seen on deck. The whole line of
boats passed quietly by, despite the bom¬
bardment. The peasants and teamsters
had to resign themselves to their fate.
But for many months the ship continued
to navigate with its pilot house barricaded
as a protection against further occurrences
of this sort.
Mathias Stinnes, soon known as “old
Matt,” after having been in business for
thirty-five years, perished in a railroad
bridge accident at Hochfeld.
Every ship in the Stinnes fleet bears the
name of its founder in addition to the
3 23
HUGO STINNES
serial number, and is known to every child
on the Rhine. The type of ship, the kinds
and quantities of goods carried, have of
course changed appreciably. Whereas at
the beginning of the Stinnes line the old
wooden barges were about 200 tons burden,
the type of steel barge most in use to-day
can carry a load of from 1500 to 1700 tons.
The most powerful Stinnes tugs tow four
barges with an aggregate load of 6,000
tons, equal to the capacity of about 400
freight cars, and make about a mile and a
half an hour, upstream. The great role
which navigation plays in the Rhine-Ruhr
district is revealed by the fact that the
volume of freight, passing through the port
of Duisburg on the Ruhr before the war,
amounted to far over 20,000,000 tons an¬
nually, which is several million more than
the freight traffic of Hamburg.
The founder of the house of Mathias
Stinnes built up three main branches of
the business; namely, mining, the coal
trade, and transportation. When he died,
24
HUGO STINNES
in the year 1845, he left a firm of such wide
ramifications and many-sided connections
that his successor might well experience
difficulty in keeping the business together.
Several successors attempted to do this but
failed. His son Mathias, Jr., popularly
called “Little Mathias,” had all he could
do to keep the great firm going. The older
Mathias had left detailed instructions as
to the future policy of the business, and the
close bonds that united the numerous mem¬
bers of the family forestalled any tendency
to a division of interests. Nevertheless it
was found necessary in 1848 to convert the
firm of Mathias Stinnes, Limited into a
stock company, called the “Mathias Stinnes
Trading Corporation of Mülheim on the
Ruhr,” in order to assure its continued
existence. At that time the Rhine and
Ruhr fleets together comprised 60 coal
barges. The firm had warehouses in Cob¬
lenz, Mainz, Mannheim, and Emmerich.
It mined coal on four of its own mines
known respectively, as the Victoria-Mathias
25
HUGO STINNES
mine, the Friedrich-Ernestine mine, the
Graf Beust mine, and the Carolus Magnus
mine. In addition, it had majority stock
control in 38 other mines.
The following years revealed the solid
foundations of the old firm of Mathias
Stinnes. Before long a large part of the
shares of the Mathias Stinnes Trading Cor¬
poration of Mülheim on the Ruhr, was
again in the hands of the family. In i860
the members of the family dissolved the
corporation and reestablished the former
firm of Mathias Stinnes, Limited. Mathias
Stinnes had left seven heirs, consisting of
four sons and three daughters. Mathias
Stinnes, Jr., died in 1853, when Gustav
Stinnes, the second son of Stinnes, Sr.,
took over the management of the firm until
his death, 1878. Thereupon, Herman Hugo
Stinnes, the third and youngest son of
Mathias Stinnes, headed the firm until his
death in 1887. His wife was Adeline
Coupienne, and their second son is the pres¬
ent Hugo Stinnes, born February 22, 1870.
26 '
HUGO STINNES
At its hundredth anniversary Mathias
Stinnes, Limited, owned 21 tugs and 85
barges, having, in 1906, acquired the trad¬
ing and shipping corporation of H. A. Disch
of Mainz. It had also acquired the mine
called “Mathias Stinnes,” formerly Car¬
nap, which became the most important of
all its mining properties.
The Stinnes family has played a very
important part in the organization of the
Ruhr coal industry. The members of the
family are among the founders of three im¬
portant combines in the Ruhr district.
These are the Confederation of Mining
Interests under the Jurisdiction of the
Board of Mines for Dortmund, founded in
1858, which has been largely responsible
for the technical development of mining;
the Rhine - Westphalian Coal Syndicate,
formed in 1893, which regulated the pro¬
duction, price, and distribution of the
Ruhr coal deposits; and the Rhine Coal
and Shipping Company, formed in 1903
and known as the “Coal Bureau.” This so-
27
HUGO STINNES
called “Coal Bureau” and the Rhine-
Westphalian Coal Syndicate, usually called
the “Coal Syndicate,” control the produc¬
tion and distribution of coal in the entire
Ruhr district.
In the course of a century’s growth, the
firm of Mathias Stinnes, Limited thus
branched out into transportation, com¬
merce, and mining, on an imposing scale.
CHAPTER III
HIS FIRST ENTERPRISES
Stinnes began his career under favorable
conditions. Even in these days of free op¬
portunity Germany can show no industrial
leader of the calibre of a trust magnate
who has reached the pinnacle of his power
by climbing up from the bottom. Klöckner,
Krupp, Rathenau, Siemens, are all men who
have developed their inheritances. The
German industrial field has been pretty
well divided up. It is necessary for the in¬
dividual to grow up in it, in order to achieve
importance. Anybody coming from the
outside is bound to find it difficult to take
root in this soil. Otto Wolf is the excep¬
tion which proves the rule. But his success
lies almost exclusively in the field of com¬
mercial enterprise. Perhaps it is due to the
29
HUGO STINNES
gigantic concentrations of modern business
which lead to the absorption of numerous
independent concerns which cannot resist
this process, that new men are more likely
to reach a commanding position within this
field. The Stinnes Trust shows numerous
examples of this. Several directors of the
Stinnes enterprises have risen from labor
circles.
But it is not enough to be a son or a
grandson to ensure success. Respected old
names are constantly disappearing. Be¬
sides an inheritance and a tradition behind
him, the industrial leader of to-day must
also have a large measure of power, effi¬
ciency, and personality.
Hugo Stinnes had the tradition and the
widely ramified connections of his family.
The inheritance in itself did not amount
to much. After a short period of com¬
mercial apprenticeship in Coblenz, he learnt
the mining business both above and below
ground at the Wiethe mine. At the age of
nineteen he attended a school ol mining.
30
HUGO STINNES
Then he took a position in the firm of
Mathias Stinnes, Limited. After two years
he did not feel himself suited there, and at
the age of twenty-three he formed his own
firm under the name of Hugo Stinnes,
Limited. He also continued as director of
mining operations in the family mines.
The paid-in capital of his firm amounted to
50,000 marks.
It is extraordinary how the character¬
istics and tendencies of the old Mathias
Stinnes reappear in his grandchild. One
finds the same restless spirit, the same dar¬
ing, the same talent for combinations and
constructive effort. But the field of ac¬
tivity for these powers is infinitely greater.
Never before have the opportunities in
German industry been so favorable to con¬
structive business genius as they are to-day.
Up to a short time ago, the organizers of
gigantic trusts on the American scale were
unknown in German industrial life. For
years there had been powerful combina¬
tions of finance and industry under various
31
HUGO STINNES
leaderships, and several large enterprises,
such as those of Thyssen and Kirdorf, had
enjoyed a period of astonishing growth, due
to favorable opportunities and the daring
of those in charge. But it sounded in¬
credible to Germans before the war, that
the industry of the United States should be
dominated by five men. Carnegie’s United
States Steel Corporation and Rockefeller’s
Standard Oil Company, which deal in mil¬
lions, were regarded by them as examples
of industrial empires.
These magnates could not achieve their
billion-dollar eminence without the aid of
unlimited stock manipulation, unscrupu¬
lous methods in killing competition, and
unbridled speculation. A dissolution of all
established economic organizations, and the
rapid development of absolutely new forms
of organization have taken place in Germany
since the war. The extent to which this
has gone is best indicated by the fact that
American methods of financing, of pooling
of interests, and of combinations, have
32
HUGO STINNES
already been adopted in Germany, and are
undergoing further development.
At the height of the trust period in
America, the London Economist estimated
that the five magnates, Rockefeller, Harri-
man, Morgan, Vanderbilt, and Gould, were
worth over three billion dollars and con¬
trolled over thirty billion dollars, which
represents the greater part of the total
American capital invested in banks, rail¬
roads, and industries. This gave them a
very considerable control of the industrial
life of the United States.
A large consolidation movement of Ger¬
man industry got under way in the nine¬
ties. The freedom of trade in the nineteenth
century had promoted a concentration of
power in industry, commerce, and also in
agriculture, which led to strong opposition
from the smaller business interests, as well
as to a fierce competitive struggle between
those in control. But a small cycle of indus¬
trial crises sufficed to make even the most
solid business men recognize on what inse-
33
HUGO STINNES
cure foundations their enterprises were
based. Thus, various industrial groups
entered into combinations. At first the
emphasis was laid upon common interests.
Coalitions of employers and employees
were formed in every branch of industry in
order to secure the most favorable condi¬
tions for both parties. These defensive
organizations of various units in the indus¬
try were followed by consolidations into
larger groups, which took the form of syn¬
dicates and cartels. Here certain limita¬
tions upon independent organizations were
mutually accepted for the purpose of avoid¬
ing the slowing up of sales, price fluctations,
and the effects of crises. At the same time,
associations were formed for reducing the
cost of production and retail prices.
These consolidations brought about a
general weakening of the excluded indus¬
trial units and led to fusions, especially
within the industry. This was but a step
removed from concentration on a large
scale in that, for example, a syndicated
34
HUGO STINNES
business on the basis of cheaper raw ma¬
terials could be operated more profitably
than other isolated concerns which the
syndicated business absorbed one after the
other.
The system of stock companies favored
this development and in many cases was
necessary to make it possible. It is gen¬
erally admitted that in former days, be¬
fore government regulation was introduced,
American corporations were often none too
scrupulous about the law. They introduced
many new methods of stock participation
and of pooling of interests, which frequently
were by no means to the advantage of the
general public. Some of these methods
have come into general use and have also
been adopted by German corporations. It
is no longer a secret that the combinations
of transportation systems and other indus¬
trial interests can easily lead to a conceal¬
ment of the actual assets of companies, and
in fact frequently do so. They also lead to
consolidations of so complicated a nature
35
HUGO STINNES
that they pass beyond the power of any
individual to survey.
These companies may often be compared
to the numerous links of a chain which
are under the control and direction of
anyone who has the first link in his hands.
The system of preferred shares, with mul¬
tiple voting power, increases the possibili¬
ties of exerting influence still more. At the
same time the owners, despite their com¬
paratively small capital investment, have
the determining vote in all important de¬
cisions of the company. In this way it is
easily possible, under certain circumstances,
for a small group to dominate affairs at
will without much outlay of capital. These
methods are justified at present on account
of the danger of foreign control, due to
the exchange situation. But the fact re¬
mains that it is always possible for a small
group to bring a greater and greater sec¬
tion of industry under its control.
Anyone who has the influence to put
through a scheme of industrial control can
36
HUGO STINNES
do so nowadays on a much larger scale
than ever before. And it is open to anyone
to misuse this power. Unless Germany is
willing to be exposed to contingencies and
surprises of a most startling nature, she will
soon have to recognize the necessity of
investigating and controlling this highly
complicated situation.
The movement towards consolidation is
well under way in German industry. Hugo
Stinnes is one of the main forces behind
these developments. Mining, the coal busi¬
ness, and water transportation, form the
fulcrum from which he operates, as was
the case with his grandfather Mathias
Stinnes. He runs his own mines and ore-
concentration plants. He acquires ships
for commerce both on inland waterways
and on the high seas. He is a coal dealer
with international markets. He has his
branches on the continent and overseas.
His ships are to be seen on rivers and canals,
on the North Sea and the Baltic, on the
Mediterranean, and on the Black Sea.
37
HUGO STINNES
Hugo Stinnes began to exert an influence
upon the construction of the entire German
industrial edifice very early in his career,
through the organization and the various
combinations of his companies. He is one
of the controlling figures in the consolida¬
tion movement in the mining industry.
The Rhine-Westphalian coal district, which
a hundred years ago was run by patri¬
archal operating units on a small scale,
in the course of the nineteenth century
became the scene of large-scale capitalistic
operations which frequently had recourse
to unscrupulous methods. After the union
of the Ruhr district with Prussia, the in¬
dustrial forces were increased through the
immigration of large bodies of laborers,
and the appearance of more and more
employers. Many of these employers were
guilty of ruthless exploitation and short¬
sighted methods of administration, so that
they were not unjustly accused of putting
the slogan “Business is business,” before
every other consideration. Wild promotion
38
HUGO STINNES
and unbridled competition combined with
panics to bring about uncertain times for
the mining operations. Production and
price agreements and control of distribution
were evolved with increasing frequency
from about 1870 on, as a defense against
these tendencies.
We have already seen that the Stinnes
family had always been a leader in such
endeavors. It is therefore not astonishing
to find young Stinnes familiar with this
development. He soon played a leading
role in the Rhine-Westphalian Coal Syn¬
dicate. The syndicate now includes prac¬
tically the entire coal ouput of the Ruhr
basin, and regulates production, prices, and
consumption. In the same way Hugo
Stinnes is a power in the Coal Bureau —
the very name is indicative of the practical
spirit of this district — which has been in
existence since 1903, having brilliantly or¬
ganized the market for Ruhr coal. The
Rhine - Westphalian Coal Syndicate, the
firms of Mathias Stinnes, Limited and
4 39
HUGO STINNES
Hugo Stinnes, Limited, and a number of
the other companies have considerable capi¬
tal invested in the Coal Bureau.
Hugo Stinnes soon added the production
of iron and steel to the production of coal.
The German-Luxemburg Mining & Smelting
Company became his main sphere of activity.
The district of German-Luxemburg was
developed with uncanny rapidity. At the
end of the nineties, the Differdingen Blast
Furnace Company, Inc., in Luxemburg,
and the Dannenbaum Mining Company
were combined into the Differdingen-Dan-
nenbaum Iron & Coal Company. But this
company did not last and was soon liqui¬
dated with considerable loss to the stock¬
holders and creditors. The German-Luxem¬
burg Mining & Smelting Company, Inc.,
with a capital of 1,000,000 marks, was
formed in 1901 at Bochum. This corpora¬
tion took over the Differdingen - Dannen¬
baum Iron & Coal Company. Within the
year the capital stock was raised to 25,000,-
000 marks, and by 1910 this figure had been
40
HUGO STINNES
increased to 60,000,000 marks. The Ger-
man-Luxemburg Mining & Smelting Com¬
pany has an interest in the Saar-Mosel
Mining Company and thus procures the
coal for the Differdingen plant at a con¬
siderable freight saving.
Soon after this, the German-Luxemburg
Mining & Smelting Company was further
increased by the addition of the Union, a
technically highly developed corporation
engaged in the mining and iron and steel
business at Dortmund. On this occasion
the capital was again increased so that it
now reached 100,000,000 marks. In this
way the German-Luxemburg Mining &
Smelting Company developed into the Dif¬
ferdingen Smelting Company, whose main
business consisted in exporting to Frank¬
furt, Belgium, and countries oversea; it
thus became a counterpart of the Rhine-
Westphalian industrial district. Several
mines were added as the basis for a coal
supply for the Dortmund works. In order
to utilize the Saar coal, the production of
41
HUGO STINNES
iron was increased through the addition of
the blast furnaces and steel mills of Rii-
melingen and St. Ingbert.
Altogether the German-Luxemburg Min¬
ing & Smelting Company comprises estab¬
lishments at Bochum, Dortmund, Mül¬
heim on the Ruhr, Emden, and at Differ-
dingen (Luxemburg), though the last has
been taken away through the liquidation
resulting from the treaty of peace. The
greater part of the mining establishments is
situated in the Ruhr basin. Here the com¬
pany owns the coal and iron-ore works of
Dannenbaum, the mines Prinz Regent and
Friedlicher Nachbar, the factory at Hasen-
winkel, and the series of mines of Bruch¬
strasse at Langendreer, Wiendahlsbank at
Annen, Adolf von Hansemann at Mengede,
Glückauf Tiefbau, Karl Friederich’s Erb-
stolln at Stiepel, Kaiser Friedrich at Barop,
Luise Tiefbau and Tremonia at Dortmund.
Besides this, the company is interested in
the Rhine-Westphalian Mining Company
at Mülheim (Ruhr). The total production
42
HUGO STINNES
of the coal mines amounts to over 5,000,000
tons annually. The coke produced annually
amounts to 1,300,000 tons. The by-prod¬
ucts consist of considerable quantities of
ammonia, tar, benzol, and other products.
The plants at Dortmund, which have an
exceptional technical equipment, include
six blasting furnaces and one steel plant, be¬
sides rolling mills, pressed steel mills, and
foundries. It also has its own plants to
continue the manufacturing process up to
the finished product. All kinds of materials
and accessories for the construction of rail¬
road engines and rolling stock are manu¬
factured at Dortmund. The electric estab¬
lishments are equipped with all the latest
improvements in mining technology. The
Dortmund works also include the Horst
iron and steel works with their own blast
furnaces, a screw factory, a wagon-spring
factory and a series of subsidiary factories.
The ore for the Dortmund Union is sup¬
plied primarily from its own iron-ore mines
on the Ruhr, in the district of the Sieg
43
HUGO STINNES
River, on the Weser River, in Nassau, and
in the Harz.
The mining syndicate, Friedrich Wilhelm,
at Mülheim-on-the-Ruhr, has belonged to
the German-Luxemburg Mining & Smelt¬
ing Company since 1905. This establish¬
ment owns a large number of its own
mining fields, and up to the war had a
share in the Lorraine mines. The mine at
Mülheim includes five blast furnaces capa¬
ble of producting 220,000 tons annually.
Large foundry establishments manufacture
machine parts, casti ' and pipes. A large
number of establishments with the most
up-to-date special machinery continue the
process of manufacture of steel products.
They specialize in mining and foundry
machinery, so that the German-Luxemburg
Mining & Smelting Company is in a posi¬
tion to supply its own technical equipment.
Since 1911 the German-Luxemburg Min¬
ing & Smelting Company has been linked
up with the North Sea works at Emden.
The factories there are being enlarged in
44
HUGO STINNES
conjunction with the recent Helling estab¬
lishments. The North Sea factories are
interested in the production of coal, in the
coal trade, and in the sale of benzol, am¬
monia, and tar, through the agency of a
number of companies.
The Hohenzollern foundry, situated at
Emden, which belongs to the German-
Luxemburg Mining & Smelting Company,
has its own mine fields in Upper Frankonia
and in the Upper Palatinate.
Through the North Sea works at Emden,
the German-Luxemburg Mining & Smelt¬
ing Company is interested in the German
Navigation Company, “ Midgard,” at Bre¬
men, in the Rhine Navigation Company, and
in the Mannheim Towing Company, which
provide it with sea and river transportation
facilities.
Before the liquidation, brought about by
the treaty of peace, extensive factories in
Differdingen and Lorraine belonged to the
German-Luxemburg Mining & Smelting
Company. The Differdingen works owned
45
HUGO STINNES
ten blast furnaces in the immediate vicinity
of the mines, as well as numerous other
factories almost entirely engaged in manu¬
facturing iron girders. Since 1911 these
works had been connected with the mining
and foundry establishments of Riimelingen
and St. Ingbert through a joint agreement.
Hugo Stinnes organized and administered
this gigantic enterprise with great success.
By means of the saving in freight rates,
and by perfecting the management, he
made it possible to concentrate upon the
production of a highly developed finished
article, and at the same time to make the
business extraordinarily profitable. The
German-Luxemburg Mining & Smelting
Company, with more than 40,000 em¬
ployees, thus became one of the leading
mining establishments, of the greatest im¬
portance both for the home market and
for the export trade.
A second enterprise of gigantic propor¬
tions, the Rhine-Westphalian Electric Com-
46
HUGO STINNES
pany, grew up under the direction of Hugo
Stinnes while the German-Luxemburg Min¬
ing & Smelting Company was developing.
This was founded in 1898, and first took
over the management of an electrical plant
in Essen-Ruhr. From the very beginning
the object of this enterprise was extraor¬
dinarily far-reaching. The Company was
intended to supply the whole Rhine-West-
phalian industrial district with electric
power. The power plant at Essen was
erected in immediate connection with the
old Stinnes mine of Victoria-Mathias. In
the eastern part of the Ruhr coal basin a
second modern plant was erected at the
coal mine Wiendahlsbank, which belongs
to the German-Luxemburg Mining & Smelt¬
ing Company. By 1908 the Rhine-West-
phalian Electric Company had already be¬
come so large that the eastern plant was
combined with the Westphalian Electrical
Works, Inc., under one joint management.
The territory supplied by the Rhine-
Westphalian electrical power stations ex-
47
HUGO STINNES
tends from the Dutch border on the north
to the Ahr valley in the south, and almost
entirely includes the government districts
of Düsseldorf and Cologne, with all their
townships.
In addition, the Company developed the
gas and water supply, and since 1912 has
undertaken to supply the gas for 25 cities
and townships. The directorship of this
electrical industry is very interestingly or¬
ganized. The ownership of the Rhine-
Westphalian Electric Company is in the
hands of both individuals and municipali¬
ties. The cities of Essen, Mülheim-on-the-
Ruhr, Ruhrort, Solingen, Gelsenkirchen,
and numerous other municipalities, own
shares in the Company.
In the natural course of its development,
the Rhine-Westphalian Electric Company
undertook to supply the Rhine-Ruhr dis¬
trict with a comprehensive network of
street-car systems and small gauge railroads.
Thus Hugo Stinnes is inextricably asso¬
ciated with the Rhine-Westphalian indus-
48
HUGO STINNES
trial district. By virtue of the many
directorships which he holds, he is in close
touch with every business of any impor¬
tance in this industrial section.
Besides this, he has also devoted special
attention to the German seaboard. He had
already anticipated the close connection
of his industrial district with ocean trans¬
portation, in founding a small establish¬
ment at Harburg-on-the-Elbe. This was
followed by the formation of the firm of
Hugo Stinnes Shipping Company, Limited,
for the purpose of going into the shipping
business on a large scale. This firm soon
owned 13 of its own steamers with which
it carried coal, ore, wood, and grain, to
various European ports.
CHAPTER IV
HIS PART IN THE WORLD WAR
The activities of Hugo Stinnes during the
period of the World War have given rise
to a great deal of contradictory discussion.
It will be a long time before we shall be
able to see what was going on behind the
scenes in Germany on the industrial side
of the war, and much of what happened
there may never be fully cleared up. It
is generally known that for many business
men, and especially for those engaged in
the major industries, the war turned out
to be a period of extraordinary industrial
acceleration. In a state which in normal
times shows little sympathy for collectivism,
it is of course to be expected that a period of
war will bring ouc the same clash of interests
that characterizes a highly individualized
50
HUGO STINNES
industry, and will even sharpen these con¬
flicts still more. We must also remember
that though there was an accurate plan for
general military service, not even the most
primitive arrangements for general indus¬
trial service in war times had been prepared.
So indefatigable a business man as Hugo
Stinnes could not be expected to remain
idle in a period of universal activity. He
necessarily made the greatest possible use
of every opportunity, without reflecting
particularly about the unfortunate causes
that had made these opportunities possible.
The liquidation of industries in occupied
Belgium forms a chapter of its own. The
industrial war of the Entente, the blockade,
and the influence exerted upon neutrals,
called for counter-measures on the part of
the Central Powers. The liquidation in |
Belgium was entrusted to the German in- j
dustrial leaders. Three companies were i
formed in the Ruhr industrial district: the
Industrial Company, Limited, the Trans¬
portation Company, Limited, and the Min-
51
HUGO STINNES
ing Company, Limited. All these companies
were formed in 1916. Among those inter¬
ested in these companies were Friedrich
XyKrupp, Inc., the Phönix Company, the
Gute Hoffnung Smelters Company, and
the German-Luxemburg Mining & Smelt¬
ing Company, Inc. This last company in¬
cluded Hugo Stinnes. These three com¬
panies played a great part in carrying out
the proposed measures for taking over the
Belgian industries. They were especially
favored in regard to the purchase and
management of Belgian factories. They
further secured for themselves the exclusive
right of purchasing coal and metal mines,
and factories, and ran the Belgian gas,
water, and electric works. The further
plans of these companies were, of course,
cut short by the outcome of the war.
During the war, Hugo Stinnes greatly
strengthened his grip upon German indus¬
try. He gave his special attention to the
development of the trade and transporta¬
tion possibilities at his command. The
52
HUGO STINNES
Hamburg shipping trade formed a combina¬
tion with the metal industries. At this
time Albert Ballin made the following state¬
ment: “The Hamburg American Line in¬
tends to consolidate its interests more defi¬
nitely and completely than hitherto, with
the capitalistic groups of our key indus¬
tries and our banking system.”
Stinnes acquired an interest in various
oversea steamship lines and mercantile
firms. In 1918 he became interested in the
Woermann Line and in the German East-
African Line. He established close connec¬
tions with the Hamburg American Line and
the North German Lloyd Line. Before
this, the Stinnes Trust had already taken
over several importing firms, among them
the coal business of H. W. Heidmann at
Hamburg, together with its wharves and
steamers. In the fall of 1917, Stinnes
formed the Hugo Stinnes Ocean Navigation
and Trading Company, Inc. His son is
especially active in this company.
Since the middle of 1918, Stinnes has also
53
HUGO STINNES
been interested in the German-American
Petroleum Company of Hamburg. Stinnes
bought the Hamburg City Hall Hotel, and
the Hotel Hamburger Hof. These big
buildings were converted into offices and
were used to house the various Boards of
Directors and their executive staffs.
Additional mercantile firms in Königs¬
berg and Bremerhaven were added to
Stinnes’ shipping combine, together with
the Baltic Navigation Company at Flens¬
burg. Eleven large steamers were ordered
from various German shipyards. After the
war, the entire ocean transportation of the
Stinnes Trust was to be handled by the
Stinnes fleet.
At the same time Stinnes secured vast
land holdings in East Germany with ex¬
tensive forests, in the interests of his mining
business. The forests were intended to
provide the mining timber for the Stinnes
mines. Towards the end of the war, the
Stinnes Trust also acquired interests in the
Rhine lignite deposits. Thus a mighty in-
54
HUGO STINNES
dustrial unit, developed and directed with
great forethought, had been brought to¬
gether under the powerful leadership of
Stinnes just before the revolution broke out.
5
CHAPTER V
THE MINING TRUST: THE RHINE-ELBE-UNION1
The revolution in Germany after the war
gravely threatened the complicated struc¬
ture of German industrial life. Ballin, the
director of the Hamburg American Line,
saw his life work destroyed, and retired
from the scene. During this period Hugo
Stinnes’ nerves remained unruffled. The
peace treaty was signed, and important
sections of the German industry were de¬
tached from the main body. The German-
Luxemburg Mining & Smelting Company
lost all its enterprises in the southwest,
including its iron-ore and coal supply. In
the last year before the war, the south¬
western district had produced the enormous
1 Rhine-Elbe is the name of a Gelsenkirchen mine, and Union
stands for a Dortmund factory of the German-Luxemburg
Mining & Smelting Company.
56
HUGO STINNES
amount of 750,000 tons of pig iron for the
German-Luxemburg Mining & Smelting
Company, and had mined 1,000,000 tons of
coal, amounting to 60% of the entire output
of the Company. The Company tried to
retain the Differdingen works, situated in
Luxemburg, but the ore deposits upon
which these factories depended were located
in Lorraine. Thus this enterprise also had
to be sacrificed. The connection with the
plant at Rümelingen-St. Ingbert was like¬
wise destroyed.
In this way the German-Luxemburg
Mining & Smelting Company lost its entire
investment in the southwest. A French
group replaced the Stinnes Trust in Luxem¬
burg and Lorraine. This was a vital blow
to the Company, although the purchase
price received from the French Company
put considerable cash at its disposal. An
important source of supply for running the
factories could also be counted upon through
an agreement, made for a period of thirty
years, according to which a considerable
57
HUGO STINNES
proportion of the ore requirements of the
German-Luxemburg Mining & Smelting
Company was assured.
As a result of the loss of St. Ingbert, the
German-Luxemburg Mining & Smelting
Company had to cast about for new manu¬
facturing plants in order to be able to sup¬
ply the necessary intermediate products
for the manufacture of the finished goods.
As it was impossible to erect any new
buildings, the Company acquired a number
of old factories. Among these were the
steel works of the Brüninghaus Company,
Inc., and the firm of Friedrich Thomee,
Inc., both situated at Werdohl, as well as
the firm of Karl Berg, Inc., at Eveking.
These factories were adopted for manu¬
facturing bar and plate steel, as well as
castings, springs, and wagon parts. Fur¬
ther purchases included the steel roller
mills of Meggen, the chain factory of Karl
Schliepers in the city of Grüne, and the
rivet factory of Knipping Brothers at
Altena.
58
HUGO STINNES
But these protective extensions of the
industry did not satisfy Stinnes. He de¬
veloped a project capable of continuing the
unprecedented growth of the German-Lux-
emburg Mining & Smelting Company, de¬
spite all its adversities. His attention had
been directed to the Gelsenkirchen Mining
Company, Inc., another gigantic mining
business which had also been crippled and
reduced through the treaty of peace.
The Gelsenkirchen Mining Company,
Inc., was the work of the brothers Emil and
Adolph Kirdorf. It was founded in the
year 1873 as a mining business, employing
a thousand men, and for a long time, con¬
fined itself to coal mining. Important
consolidations gradually enabled the busi¬
ness to attain a commanding position in the
district. In 1913 it employed 55,000 hands,
and its share in the Rhine-Westphalian
Coal Syndicate amounted to 10,000,000
tons, representing 11% of the whole Syn¬
dicate. The expansion of the Gelsen¬
kirchen Mining Company, Inc. was at
59
HUGO STINNES
first in a horizontal direction, but after 1905
it undertook to expand vertically, through
a consolidation of the coal-consuming in¬
dustries with the coal producers, especially
through consolidations with mining syndi¬
cates at Aix-la-Chapelle and at Schalk.
The terms “horizontal” and “vertical”
as applied to trusts require a word of ex¬
planation. A horizontal trust approximates
the familiar type of American trust which is
usually a consolidation of all the units of a
particular industry, engaged in the produc¬
tion or manufacture of a single kind or type
of product. The object of such a trust is
to produce an article as economically as
possible and to exercise a monopolistic con¬
trol over it. The Standard Oil Company is
an excellent example of this kind of trust.
A vertical trust is a complete and self-
contained consolidation of all the succes¬
sive stages of manufacture from the produc¬
tion of raw material to the final distribu¬
tion of the finished article. It is an indus¬
trial cycle completely protected at both
60
HUGO STINNES
ends, with every source of supply and
every stage of production in the same hands.
If the Standard Oil Company acquired coal
and iron mines to manufacture its own sup¬
ply of oil machinery, tanks, and pipes, con¬
trolled its own railroads to handle its tank
cars, and built its own tankers in its own
shipyards, besides controlling the automo¬
bile industry in order to find a market for
its gasoline, it would approximate the Ger¬
man idea of a vertical trust.
Besides its mines and ore fields, the
Gelsenkirchen Mining Company, Inc., soon
included blast furnaces, steel works, wire
factories, and similar plants. This company
laid great stress upon the extension of its
ore basis. As the interest charges were
unusually heavy, the Kirdorf brothers were
compelled to pay especial attention to the
reduction of production costs. They skill¬
fully foresaw the necessity of technical
improvements, and their enterprise became
distinguished for its gigantic buildings and
the modern methods constantly introduced.
6 1
HUGO STINNES
Thus in 1913, the cost of new buildings and
developments was estimated at 60,000,000
gold marks. The result of the war was a
catastrophe for this concern. It was forced
to pay terrible penalties for its expansion
into the Minette district, another German
mining field. It had to give up its diversi¬
fied enterprises and return to mining. For
this reason Stinnes could count upon a
friendly reception from the Gelsenkirchen
Mining Company when he undertook a
rapprochement. It was a matter of sheer
necessity for both Kirdorf and Stinnes to
come together. Nevertheless Kirdorf, who
has always been known for his independence,
must have found it very painful to combine
his life work with that of another man.
The consolidation went into effect in July,
1920. The control of the two businesses
rests with the Rhine-Elbe-Union. The
leaders of this consolidation, besides Stinnes,
are General Director Vogler of the German-
Luxemburg Mining & Smelting Company,
and Emil Kirdorf.
62
HUGO STINNES
The German-Luxemburg Mining & Smelt¬
ing Company and the Gelsenkirchen Min¬
ing Company have entered into an agree¬
ment which is to hold good for eighty years.
They now complement each other and
mutually aid each other’s development.
They form a mining business based upon
broad foundations, and are starting under
the most favorable auspices. Their con¬
solidation into the Rhine-Elbe-Union is to
last until the year 2000.
CHAPTER VI
THE ELECTRO-MINING TRUST: THE SIEMENS-
RHINE-ELBE-SCHUCKERT-UNION
These tendencies to form gigantic fusion
and expansions in German industry cannot
be entirely ascribed to personal ambition or
to the craving for power. The driving
forces are of an economic nature. Before
the war, Germany had an annual increase of
population which amounted to more than
the entire population of a large city like
Detroit or Buffalo. The amount of arable
land did not keep pace with this increase.
The number of emigrants was inconsider¬
able. For this reason, an increased produc¬
tivity from year to year was necessary in
order to keep up the standard of mainte¬
nance. Compared to any other country
Germany had a very small number of people
64
HUGO STINNES
not engaged in productive labor. Never¬
theless, the production of goods from the
country’s own raw materials was insufficient
to cover the basic needs. It was therefore
essential to export on a considerable scale,
either through the direct shipment of raw
materials for foreign needs, or through
manufacturing indigenous and imported
raw materials into finished goods for export
and re-export. In order to ensure adequate
profit from this export trade, it became
more and more necessary to protect the
raw material, that is, to convert it at
home into partly or entirely finished goods.
For this purpose it was necessary to do the
manufacturing at home, and to produce
goods of the finest and most varied grades
of workmanship. It was essential to make
the raw material yield the greatest possible
increment of profit and wages before the
goods passed out of the country.
Under these conditions it was necessary
to develop this so-called continuing indus¬
try, and to foster technical improvements
65
HUGO STINNES
as carefully as possible. Quite aside from
the unavoidable export of raw materials,
Germany therefore tended more and more
to supply foreign markets with the greatest
possible number of the finest grades of
manufactured goods, chemicals, tools, ar¬
ticles of general use, dye-stuffs, medicines
and similar goods. At the same time, it
was necessary to increase the output and
the profit of the industries as much as pos¬
sible in order to compete in the markets of
the world.
This development was bound to lead
to consolidation, mergers and trusts. Fac¬
tories producing the same or similar goods
worked more economically and showed a
greater yield by manufacturing according
to a joint agreement and avoiding duplica¬
tion. The consolidation of industry, and
the process of building it up upon the
natural foundation of raw materials in¬
creased the productivity, saved transpor¬
tation goods, and met the special needs of
finished-goods manufacture. German in-
66
HUGO STINNES
dustry could not afford to have friction
and opposition between its industrial enter¬
prises. A certain amount of speculation
was inevitable but this did not attain large
proportions.
War and revolution have not improved
the industrial situation of the German
people. Losses in population, territory,
and materials have been very great. Ex¬
ports and imports have also been curtailed,
and besides this, the heavy mortgages of
the treaty of peace on which both interest
and capital must be paid, weigh heavily
upon German industry. Billions of paper
marks and much theoretical discussion
have not been of the slightest help in rais¬
ing production. Germany must produce in
order to live, and must produce more,
better, and cheaper goods than before.
Thus the combination of industry has
become inevitable. The elasticity with
which alterations and consolidations are
being carried out is astonishing. This is
partly achieved by technical and industrial
67
HUGO STINNES
methods. The scarcity of coal, for instance,
has led industries to adopt lignite to an ex¬
tent previously considered impossible. Pe¬
troleum is beginning to be utilized to
an astonishing degree. New methods of
chemical production are being invented
every day. The discovery and application
of new methods promise very interesting
results. The expensive experiments neces¬
sary for this development are being made
in the field where a high degree of industrial
combination has already taken place.
The introduction of better industrial
management and new forms of economic
organization is also helping to increase and
improve production. But industrial man¬
agement, plans for socializing industries,
and industrial councils, are all schemes
about which there is still very little agree¬
ment. In the meanwhile, the consolidation
movement is making headway. There are
very few isolated factories left. In some
branches of industry, isolated enterprises
have entirely disappeared. German na-
68
HUGO STINNES
tional industry is gradually becoming a
multicellular, but unified industrial body.
The art of management is becoming an
exact science, and the whole process of
production is becoming an organized cycle
under the direction of a single mind.
This development has made most prog¬
ress among the consolidated industries,
where the horizontal and vertical systems
of industrial organization were first invented
and applied. The horizontal system seeks
to apply the most rational and highly spe¬
cialized methods to some particular stage
of the manufacturing process after it has
been brought together under a unified
management and carries the process of
standardization to the furthest possible
stage. Thus the competitive struggle be¬
tween factories engaged in the same process
is either lessened or altogether abolished,
and the technical connection with the next
stage of manufacture is made with much
less waste and friction.
The vertical system seeks to unite the
69
HUGO STINNES
whole manufacturing process under the
same management, and to start the raw
material on a cycle in which it is progres¬
sively manufactured until it emerges as the
finished article. Every stage of the process
must be controlled and coordinated with
the succeeding stage. Thus for example,
the process would run from coal and ore
through pig iron, steel, casting, to tools,
machines, and electro-technical equipment.
The Rhine-Elbe-Union already shows a
vertical combination having many stages;
production of the raw material, such as coal,
ore, and limestone; production of inter¬
mediary products such as iron and steel;
production of semi-manufactured materials
such as forged iron, cast-iron, tin, wire,
and tubing; production of the finished
goods such as tools, screws, rivets, springs,
ironwork parts, railway material, and parts
for vehicles and ships. This is an excellent
example of the vertical system.
The first concern of such a system must
be to make sure of its supply of the raw
70
HUGO STINNES
materials, especially of coal. Since the
end of the war, coal has acquired a scarcity
price. All the factories are fighting for
coal. Germany, formerly one of the rich¬
est coal-bearing countries, does not possess
enough coal fuel for its industries. The
distribution is supervised by the State, but
it is impossible to keep the factories sup¬
plied. The German factories have had to
have recourse to the expensive importa¬
tion of foreign coal. For this reason the
Rhine-Elbe-Union has been straining every
effort to secure an adequate supply of coal
for its factories. The same thing holds
good for ores. Where the company has
not got enough coal mines in the immediate
vicinity, further mines have to be acquired.
Since the German-Luxemburg Mining &
Smelting Company acquired the Union
Company of Dortmund, it has opened sev¬
eral mines in the Dortmund district. As
already pointed out, it sought to compen¬
sate for its own insufficient coal supply
since the war, by combining with the
6 7i
HUGO STINNES
Gelsenkirchen Mining Company, Inc., and
this company in turn found it profitable
to enter the combination because this would
lead to the extension of the mining business,
on account of the blast furnaces of the
German-Luxemburg Mining & Smelting
Company.
Each individual production stage is built
up in relation to the stage above and below
it in the cycle of the whole production proc¬
ess. The finished-products factories are
assured of the necessary material, while the
factories that manufacture the intermedi¬
ate products are assured of a sufficient coal
and ore supply from the stage below, and
at the same time can easily dispose of their
products to the next stage of manufacture.
The geographical concentration also sim¬
plifies cooperation and at the same time
renders the work less expensive, while the
alignment of the various stages of manu¬
facture allows the individual factory to
avoid the expensive storage of materials
and supplies. This method also avoids the
72
HT7G0 STINNES
time-robbing selection of materials, the in¬
creased cost due to the middle-man, and the
uncertainty of getting the right materials.
It is clear that an enterprise of this sort
can produce better goods in greater volume,
than an isolated factory. The use of its
own products, the decrease in its mainte¬
nance cost, and its strategic industrial posi¬
tion allow it to grow faster than other en¬
terprises. We are therefore witnessing a
concentration race in the German industry
of to-day, especially in the mining industry.
Only a few large enterprises remain un¬
consolidated. The old firms of Klöckner,
Stumm, Haniel, Funke, Thyssen, Stinnes,
and others, are growing into gigantic com¬
binations which are constantly drawing
more closely together.
A few months after it was formed, the
Rhine-EIbe-Union was enlarged through
the acquisition of the Bochum Company,
engaged in mining and cast steel manu¬
facturing. This plant, which represents an
extensive combination in the Rhine-West-
73
HUGO STINNES
phalian district, has been in existence for
sixty years. It includes blast furnaces,
steel smelters, foundries, hammer and mill
works, and factories for manufacturing
railroad material, -as well as a large number
of subsidiary plants. As many as 18,000
hands are employed. The Company pro¬
cures the greater part of its raw materials
through the operation of its own mines,
coke plants, quartz mines, and limestone
fields. It also owns a network of iron-ore
mines in the ore district bordering on the
Sieg River.
Before the Bochum Company joined the
Rhine-Elbe-Union it went through a curious
experience on the stock exchange. A Ber¬
lin banker attempted to buy up the shares
of the Bochum Company on the stock ex¬
change, causing a series of fantastic price
fluctuations. When this speculator had
accumulated a majority control of the Com¬
pany, he began to look about for a pur¬
chaser. The rumor had been spread that
foreign interests, taking advantage of the
74
I
HUGO STINNES
exchange situation, were seeking to acquire
the Company. The Bochum Company
might easily have shared the fate of the
Phönix Company, and other German enter¬
prises. At this point, the Stinnes group
decided to acquire the Company despite
the artificially high price. A purchase
price was agreed upon and the speculation
came to an end. The whole episode was
an exception rather than the rule, for Ger¬
man industry is rarely subjected to such
purely financial operations.
The acquisition of the Bochum Company
was of crucial importance to the Rhine-
Elbe-Union for perfecting its plan for manu¬
facturing intermediary and finished prod¬
ucts. Its negotiations with the refined-steel
factory of Böhler Brothers & Company was
a step in the same direction.
Mining enterprises lead not only to the
metal industries, but to the electrical in¬
dustry as well. Both of these industries
had attracted the attention of Stinnes. He
75
HUGO STINNES
intended the Rhine-Westphalian Electrical
Company to supply the two industrial
provinces of Rhineland and Westphalia.
These two provinces are, of course, thickly
studded with innumerable factories, elec¬
trical distributing stations, power houses,
gas and electrical plants, railroad stations,
and trade centres, not to mention hundreds
of municipalities, with their network of
railroads and street car systems, all of which
consume light and power. By 1920 the
Company had undergone considerable ex¬
pansion through the acquisition of power
houses and new districts requiring elec¬
trical service. Its supply of raw materials
was covered by an agreement with the
Rhine Lignite Works at the Rodder mine.
A further supply of lignite comes from the
mines of A. Riebeck in Middle Germany,
as well as from the lignite mines in
Brunswick.
The Stinnes Trust thus rounded off its
mining interests at both ends through its
consolidation with the German-Luxemburg
76
HUGO STINNES
Mining and Smelting Company, and the
Gelsenkirchen and Bochum Companies.
The next step followed in the same year.
In 1920 Hugo Stinnes consolidated his
mining business with the Siemens Company
in order to form a gigantic electro-mining
industry.
The Siemens Company began its career
in a small workshop which Werner Siemens
started in 1847, in an obscure location in
Berlin. From these humble beginnings
Siemens and his partner Halske developed
a great telegraph and cable construction
company. This company built and in¬
stalled the entire Russian telegraph system.
One of the outstanding characteristics of
the Siemens family is its love of independ¬
ence. Thus for example, Werner Siemens
for many years opposed the transformation
of the firm into a corporation, so that this
step was not taken until 1897.
This year marks the beginning of a great
development. The company assumed gi¬
gantic proportions. The severe panic of
77
HUGO STINNES
1900, which played havoc with the elec¬
trical industry, threatened a number of
the larger electrical companies, which had
become involved in some very risky ven¬
tures. The great electrical company of
Siemens and the A. E. G. (Allgemeine
Elektrizitäts-Gesellschaft) were the only
ones that remained unshaken. The others,
in so far as they continued to function at
all, had to seek support from these two.
At that time the consolidation of the
Siemens Company with the Nürnberg Elec¬
trical Company (formerly Schuckert &
Company) took place. These two com¬
panies formed the subsidiary Siemens-
Schuckert Company for the purpose of
developing methods of high power trans¬
mission. A number of other companies
were likewise formed in connection with the
Siemens enterprise.
The Company supplies a remarkable
number of consumers, including electric
and gas companies, electric mining plants,
and subsidiary railroads of all kinds. Among
78
HUGO STINNES
these are the Franckonian transmission
station, the high power houses, Franken
and Thüringen; the establishment of Kupf¬
erdreh; the distributing station, Südharz;
the A. G. Wiener Lokalbahn Co. ; the Rhine
Electrical Company of Mannheim; the local
Berg Railroad; the Hamburg and Stettin
Electrical Companies, the electrical street
railway systems of Elberfeld, Barmen,
Würzburg, and so forth. The Company is
also interested in machine and automobile
factories, as well as in other factories at
home and abroad.
The products of the Siemens Company
comprise electrical manufactures and equip¬
ments of all sorts, from incandescent lamps
to subways. It also manufactures general
machinery, fine mechanical and optical in¬
struments, and other instruments of all
sorts, as well as automobiles and automobile
trucks.
It is noteworthy that the Stinnes Trust,
as in the case of the Gelsenkirchen Mining
Company, Inc., did not effect the consolida-
79
HUGO STINNES
tion with the Siemens Company through
any financial operation, but through direct
negotiations. Mutual necessity and the
prospect of joint benefits probably played
quite as large a role as the personality of
Stinnes and his gift for organizing.
This electro-mining company is called the
“ Siemens-Rhine-Elbe-S c h u c k e r t-Union.”
This pivotal organization regulates the
financial affairs of all the related companies,
and works out the plans for a joint adminis¬
tration. But the intention is to keep the
management and the administration of each
member independent. The object of the
consolidation was described as follows, by
the chairman of the board of directors of
the Siemens-Halske Company: “In these
days, where nothing is left to us except
intelligent and highly trained workers, we
must see to it that everything that we can
extract from our soil does not reach the
markets of the world until it has been
partly or entirely manufactured by our own
labor/’
80
HUGO STINNES
This huge company, with its 200,000 em¬
ployees, is in a position to experiment with
power-saving devices, radical innovations,
and opportune expansions as well as to
introduce methods of specialization and
standardization. This is one of the great
advantages of concentrated effort.
The consolidation of the Siemens Com¬
pany with the great mining interests having
been effected, it remains for us to follow
the further development of its great com¬
petitor, the Allgemeine Elektrizitäts-Gesell¬
schaft. Here also we already see the be¬
ginning of vertical combination. By virtue
of its connections, especially with the
Rhine-Westphalian industrial district,
which is a large consumer, the Siemens
Company will enjoy extraordinary advan¬
tages in regard to its supplies as well as the
disposal of its products. It is equally cer¬
tain that the future plans of the Stinnes
Trust, which are already looking beyond the
boundaries of Germany, will be of the great¬
est importance for the electrical industry.
81
HUGO STINNES
In order to round out the company,
Stinnes has also begun affiliations with
certain metal works such as copper and
brass factories, which are of great im¬
portance for the electrical industry, and
has also become interested in aluminum
plants. In addition, he has brought the
automobile industry within his sphere,
through the purchase of the Loeb auto¬
mobile factory in Berlin.
According to the agreement, the members
of the Siemens-Rhine-Elbe-Schuckert-Union
are merged together into a homogeneous or¬
ganization, to last until the year 2000. The
time seems to have arrived when individu¬
als can plan industrial combinations for
centuries ahead.
CHAPTER VII
STINNES’ AFFILIATIONS IN GERMANY AND
ABROAD
The Stinnes Trust has grown from the
Rhine-Westphalian industrial district until
it extends over the whole of Germany.
Through the Siemens-Schuckert Company,
it has gained a foothold in the most im¬
portant industrial cities of Bavaria. At
the time of the consolidation, the combined
directorates made a statement in which
they pointed out the economic and political
importance of this event. They declared
that Bavaria and Berlin are combining
with Rhineland and Westphalia to form a
firmly knit economic unity which is des¬
tined to counteract every attempt at separ¬
ation. The sentiment of these German
industrial leaders was echoed on another
83
HUGO STINNES
occasion by the forces of labor. In the
summer of 1920, at a conference of labor
union delegates from all the mines, a resolu¬
tion was passed pledging the men to joint
action with the labor organizations of the
railroads and water highways, to cut off the
supply of coal, coke and briquettes from
any part of the country which should at¬
tempt to secede from Germany.
In view of the weakness of the present
German state authority, these economic
arguments are of great importance when
facing the danger of isolation and secession.
Aside from its success in South Germany,
the Stinnes Trust has recently obtained a
strong foothold in the most important
industrial sections of Prussia. It controls
the importation of coal and the coal market,
and shares in the distribution of machines
and manures for the agricultural operations
of East Prussia. It has acquired an almost
monopolistic position in the manufacture
of cellulose, one of the chief products of
this region. All the cellulose factories of
84
HUGO STINNES
East Prussia, which is rich in forests, are
under the Stinnes control.
Hugo Stinnes also turned his attention
to German Austria. This country cannot
continue to exist for any length of time
without a close economic affiliation with an
economically strong foreign country. It
will soon have to decide in what direction
this is to take place. After a long period
of paralysis and impotence, German Aus¬
tria is making frantic efforts to take care
of its economic future. The industries are
being transformed and are adapting them¬
selves to altered conditions of production.
The attempt is being made to replace the
antiquated and only partly active factories
with modern plants, and to use the coun¬
try’s untapped sources of energy. Austrian
territory is being examined for deposits of
coal, oil, natural gas, and chemicals.
The severance of the Danube states from
Austria, in accordance with the treaty, has
caused a number of vital industries to come
under foreign jurisdiction. German Aus-
8s
HUGO STINNES
tria can no longer count on these nor on
any other foreign industries. Her mori¬
bund exchange does not permit her to im¬
port as formerly, and is allowing foreign
countries to buy up Austrian industries to
an alarming extent.
Yet, despite her present weakness, Aus¬
tria is rich in economic possibilities. In
Upper Austria, in Salzburg and in the Tyrol,
there are coal deposits; oil seems to be pres¬
ent in various localities, and valuable de¬
posits of kaolin, or porcelain-earth, which
may form the basis for a highly developed
porcelain industry. There are sufficient
forests to support a flourishing paper¬
making industry. The use of water power
would put the electrical industry on its
feet, and the power thus developed could
furnish the entire mechanical energy for
industrial and transportation purposes. In
the spring of 1921, the Stinnes Trust ac¬
quired the Austrian Alpine Mining Com¬
pany, by buying up the stock. This com¬
pany owns the Styrian mining deposits, the
86
HUGO STINNES
greatest mine of Europe, and used to play
an important part before the war in sup¬
plying Italy and the Balkans with iron and
steel. In 1916, the best year of the mine,
2,360,000 tons of ore were mined, yielding
637,000 tons of pig iron, and 300,000 tons
of rolled steel. After the war, the produc¬
tion was greatly diminished. In 1919 the
production had dwindled to 244,000 tons
of ore, yielding 59,000 tons of pig iron and
70,000 tons of rolled steel, which represents
about one-tenth of the former production.
When things were at their lowest ebb,
a Viennese banker bought the majority
stock control, and sold the greater part of
it, with enormous profit, to an Italian syndi¬
cate. This acquisition was of great im¬
portance for Italy. The Italian industry,
with little iron to fall back upon in its own
country, was now in a position to secure its
iron supply from Styria. The idea was an
excellent one, but conditions made it im¬
possible to carry it out. For Italy, with
hardly any coal of its own, could not furnish
7 87
HUGO STINNES
the necessary coke to refine the ore. The
Italians controlled the mine for almost two
years without extracting a single ounce of
iron.
Besides the lack of coke, the Italian syndi¬
cate also faced a lack of labor. Formerly,
any amount of Italian laborers were to be
had to run the industry, but they now en¬
tirely abstained from coming, which is
quite natural, since no Italian could be in¬
duced to work to-day for wages paid in
Austrian crowns. On the other hand, the
syndicate was in no position to pay wages
in Italian lire.
The Austrian company formerly had ob¬
tained the greater part of its coke from its
own coke plants in Orlau near Ostrau in
Moravia, as well as from other Moravian
coke plants, and from the Ruhr coal dis¬
trict. The States that came into existence
through the fall of Austria erected trade
barriers against each other, so that the
deliveries of coke from Czecho-Slovakia
also ceased. The deliveries from the Ger-
88
HUGO STINNES
man district likewise became small and
intermittent. As a result of this situation,
the company was compelled to make an
extremely unfavorable reciprocal agreement
with Czecho-Slovakia, according to which
the original Austrian company had to de¬
liver pig iron in exchange for coke. But the
coke delivery became so inadequate that
six of the seven blast furnaces soon had to
be banked.
The acquisition of the enterprise by the
Stinnes Trust foreshadows a great change,
and is of the greatest importance for the
Styrian deposits as well as for the entire
problem of the economic reconstruction of
German Austria. The Stinnes Trust, which
controls 15.8% of the entire coal produc¬
tion of Rhine-Westphalia, and 13% of its
entire coke output, is in a position to supply
all the coke necessary to run the blast fur¬
naces at full capacity, the annual coke
requirement being 600,000 tons. The in¬
creased production of pig iron is of vital
importance in reviving the industries which
89
HUGO STINNES
depend upon iron. Under this arrange¬
ment the iron produced at the Styrian mines
no longer has to be taken to Czecho¬
slovakia, but is manufactured right in the
country. This means a resumption of the
Austrian iron industry, so that it can satisfy
the home demand, and at the same time
resume the export of iron. The excep¬
tional quality of Styrian iron has played an
important part in handicapping Austrian
iron manufactures. The iron imported
after the closing down of the mine was not
always of the quality which the Austrian
industries required for their high grade
steel products. With the Styrian iron
once more at their command, they are now
again in a position to supply the market
with goods of standard quality.
Hugo Stinnes has been criticized in some
quarters for acquiring the Alpine Mining
Company. The transaction occurred in the
critical days of the London conference.
The purchase required large financial re¬
sources and was looked upon as a measure
90
HUGO STINNES
calculated to increase the difficulty of an
understanding. It may very well be that
the impression made in London was not
very favorable, but the loss of the ore de¬
posits would certainly have been a much
greater calamity. This loss was actually
threatened because negotiations with foreign
purchasers had already begun, as in the case
of the Bochum Company where the stock
was almost bought up by foreign investors.
Austria would not have been in a position
to put this gigantic mining enterprise into
operation again without outside help. The
Kölnische Zeitung , (the leading paper of
Cologne), discussed the importance of the
case, in relation to the economic strangu¬
lation of Germany and Austria, as follows:
“The post-war policy of the Entente is
severely handicapping German industry,
and is excluding it from the world market
wherever possible. It is transforming Aus¬
tria-Hungary into a heap of wreckage, and
is paralyzing Upper Silesia to the point of
industrial impotence. The Entente has
91
HUGO STINNES
abandoned the utterly helpless Balkans,
and has nothing to contribute to the recon¬
struction of Central Europe except insen¬
sate reparation demands, penalties, and
reprisals. It has converted the ‘urge to the
southeast’ which it formerly falsely ascribed
to us, into an irresistible pressure. An
enterprising man like Stinnes, whose fore¬
sight and largeness of conception even his
enemies will not deny, is taking a leap into
the dark with the hope of transforming one
of the greatest enterprises of the continent
into an active member of European industry.
The capital involved is no trifle even for
Stinnes, and the risk is proportionately large.
Yet this step has brought down the wrath of
the Entente upon Stinnes, though none
moved a finger as long as exploiters from
every country in the world tried to share in
the auctioning off of Austria. When we
consider that Italy, a former ally, had the
first chance, but was not able to accom¬
plish anything, and that Schneider-Creusot,
made wiser by unfortunate experiences in
92
HUGO STINNES
the case of the Skoda works, left the field
open to German industry, it is really hard
to see how Stinnes deserves any reproach.
The Entente’s policy of economic encircle¬
ment of Germany cannot ignore the fact
that there are limits to these destructive
tendencies.”
The acquisition of the Alpine Mining
Company by the Stinnes Trust has thus
far been the only practical step towards
the union of Austria and Germany, and has
caused a great stir in German Austria.
This is brought out in an open letter which
a Viennese journalist at that time addressed
to Stinnes. He wrote as follows:
“You have attempted to revive the
stricken economic condition of German
Austria with your financial resources, and
have found the point at which the greatest
returns may be expected. Why was this
step so long in coming ? We on the German
Austrian side have been indefatigable for
over two years in invoking the aid of Ger¬
man capital. There must have been polit-
93
HUGO STINNES
ical difficulties, for the economic advantages
to both sides were obvious to everybody.
But the Italian purchasers could not meet
the costs. They probably hoped that their
participation in the Alpine Mining Company
would induce the Czecho-Slovaks to deliver
the coke necessary for the smelting of the
Styrian ore in larger quantities, after they
had revengefully denied it to the German
Austrians. But the Czecho-Slovaks were
not to be disturbed in the further enjoy¬
ment of their revenge, so that six of seven
blast furnaces of the company remained
cold. And at that time French, English
and American allied interests would not
furnish coke, except at exorbitant prices.
The result was that the Italians soon lost
their enthusiasm for a piece of property
which they had so triumphantly acquired.
“You, Mr. Stinnes, are the right substi¬
tute for them. For you have what they
lacked, namely, coal and coke. It is prob¬
able that the thirst for vengeance will now
also rapidly disappear among the Czecho-
94
HUGO STINNES
Slovaks, as was the case in the sugar busi¬
ness, when Austria began to receive sugar
from far off Java, at a cheaper price than
that which their Czecho-Slovak neighbors
were asking for it. Subsequently, the price
of sugar in the world markets declined to
such an extent that the Czecho-Slovak
sugar could not be sold anywhere at their
asking price. Let us hope that the same
thing will happen with their coke. They will
undoubtedly offer it to the Alpine Mining
Company, so that the Westphalian coke
will not have to be taken away from Ger¬
man industry. Next, the unemployment
will decrease. More hands will be required
in order to mine larger quantities of iron-
ore, which will also have to be smelted,
after which the iron will be used in the fac¬
tories to manufacture machines, girders,
rails, tools, and other articles. The in¬
creased supply will cause the price of iron
manufactures to come down. This will be
followed by a general reduction of prices
and wages. Then there will be a gradual
95
HUGO STINNES
resumption of building activity, which will
stimulate industry all along the line. In
short, the industrial paralysis will cease, and
our economic life will again have a healthy
circulation.
“For this reason, Mr. Stinnes, the Aus¬
trian press is again suddenly favorable to
you. This is true even of the Social-Demo¬
cratic papers which have recently swung
back to capitalism. The Social-Democratic
party, as you know, has been in a repentant
mood ever since the complete collapse of
their ambitious socialization plans at the
recent congress of the metal workers’ unions
in Vienna. The Social-Democratic faction
in our national parliament is keeping close
watch, and has made an interpellation in
parliament, drawing the government’s at¬
tention to the possibility of your shipping
the Styrian ore to Germany, and thus
paralyzing the Austrian iron industry. But
this probably merely caused you to smile,
since you are after profits which will be
greatest if you have the raw material manu-
96
HUGO STINNES
factured as much as possible on the spot,
instead of first shipping it to some distant
point.
“You must also have been highly amused
when one of our reactionary yellow journals
expressed the opinion that you had ac¬
quired the stocks of the Alpine Mining
Company for the sole purpose of shutting
down the works for the benefit of the Ger¬
man iron industry. This was undoubtedly
a case of deliberately sowing suspicion for
some ulterior motive. For you would have
much preferred the Italians to keep the
stocks of the Company, instead of selling
them to you, just as you are shedding no
tears over the increasing amount of foreign
holdings in Austrian banks and industries,
on the part of Frenchmen, Englishmen, and
Americans. Let them all continue to ac¬
quire such holdings. Those of us who de¬
sire the reconstruction of Austria, and her
close cooperation with Germany, welcome
this foreign participation.”
The step which Hugo Stinnes had thus
97
HUGO STINNES
taken is fraught with great risk, for he has
invested a gigantic sum and will have to
put still more money into this mining enter¬
prise in order to put it into complete run¬
ning order. The speculation that preceded
this step will make it extremely difficult to
derive any profit from this huge investment,
but it is characteristic of Hugo Stinnes to
build his business without always having in
mind the question of immediate or early
profit.
While taking these steps in the south and
the east, Stinnes was thinking of still
further ways of keeping open the economic
gates of Germany. Some time before the
war, he had already entered into compli¬
cated negotiations for the purpose of con¬
necting his enterprises with foreign sources
of raw materials and foreign fields of con¬
sumption. His purpose was to have a cen¬
tralized enterprise, producing its own raw
materials for its own transportation lines,
and marketing its wares through its own
98
HUGO STINNES
merchandising system. In 1920 he added
an extensive exporting department to the
Hugo Stinnes Transportation and Overseas
Trading Company, organized in 1917, to
which reference has already been made.
The charter of this company in the
commercial register of Hamburg is very
interesting. It shows how the varied enter¬
prises of Hugo Stinnes are to be developed.
The business is licensed to engage in the
following activities: To engage in trans¬
portation of every description, as well as to
build and manufacture all shipping acces¬
sories, whether at home or abroad; to deal
in the products of the mining, smelting,
and metal industries, the chemical and
electrical industry, and agriculture; to
market articles of every stage of manu¬
facture, as well as raw materials of all kinds,
especially provisions and cattle products,
mineral, animal and vegetable oils, cotton,
and other textiles in the unfinished state,
hides, jute, wood, cellulose, paper, and all
products of the intermediate industries; to
99
HUGO STINNES
engage in the re-shipping and storage of
all these products, especially during their
transmission from or to foreign countries.
The company is also licensed to undertake
the extraction, manufacture, and construc¬
tion of every form of raw material and
manufactured article in its own estab¬
lishments.
It is difficult to imagine a more compre¬
hensive industrial organization. Stinnes
now proceeds from the mining and electrical
business, to become active in the most
varied forms of German business enterprise.
The Hamburg Travelers Company, which
Stinnes founded, together with the Ham¬
burg American Line, enters the field of
travel and hotel and health resort manage¬
ment. Steamer cabins, railroad compart¬
ments, hotels, and health resorts are uni¬
fied into one system. The company owns
the Esplanade Hotel in Berlin, and the
hotels in Oberhof, Thuringia, which are
run through the Hotel Management Com¬
pany, Limited, of Thuringia. These enter-
100
HUGO STINNES
prises correlate the varied possibilities of
the traveling and tourist business, and open
up the prospect of world travel as an or¬
ganized enterprise. The route from the
North Sea to Central Germany, into Switz¬
erland and down to the Mediterranean, is
likely to be developed first.
CHAPTER VIII
STINNES AND THE NEWSPAPERS
There was much astonishment in Germany
when it became known that Hugo Stinnes,
the industrial leader, had gone into the
newspaper business. His first step was to-
acquire the well-known Deutsche Allgemeine
Zeitung. Stinnes is by no means the first
German industrial leader to own a news¬
paper. It is pretty well established that
a number of German newspaper properties,
advertising concerns, and news bureaus,
are under the control of the major indus¬
tries. The exact connections are not always
clear. This state of affairs reflects upon
the whole German newspaper system. In
many organs of public opinion, it is true,
102
HUGO STINNES
the reader can easily form his opinion of
the influence at work behind a newspaper.
But in many cases even an experienced per¬
son would find difficulty in doing this. The
policy of a newspaper may furnish no clew
whatsoever, so that it is only by accident
that the identity of those in control is dis¬
covered. This tendency has gone so far
that there are now newspaper proprietors
who possess a whole string of different pub¬
lications, with widely different policies to¬
wards political and economic questions.
These papers have become pure business
enterprises, where it is quite immaterial
to those in control whether the paper
represents this or that shade of public
opinion. These proprietors look upon
newspapers solely from the point of view
of profit.
Nowadays, another development can oc¬
casionally be observed. Men formerly en¬
gaged exclusively in the newspaper and
advertising business suddenly become in¬
terested in branches of industry that are
8 103
HUGO STINNES
entirely removed from the newspaper
business.
Nevertheless, Hugo Stinnes seems to
present a special case. The policies of
those papers that are demonstrably under
his control in no way suggest that Hugo
Stinnes is anxious to launch any propa¬
ganda in favor of his political or eco¬
nomic point of view. Deeds and not
words reveal his influence. It is just
possible that he bought these newspapers
with the idea of influencing the press in
his favor, and winning some of his pro¬
spective opponents over to his side. But
this is very unlikely.
Up to the present, the operations of
Stinnes in this field greatly resemble his
coal and electric enterprises. In both cases
he proceeds from an economic and practical
point of view. The connecting link be¬
tween his newspapers and his coal business
is wood. We have already pointed out that
he had acquired extensive forest reserves
in order to assure a supply of mining tim-
104
HUGO STINNES
ber. The possession of so much wood
seems to have suggested the production
cycle from wood pulp to newspapers, ac¬
cording to the vertical system. This as¬
sumption is strengthened when one sees
how he has fitted the various stages of pro¬
duction between wood and newspapers into
his enterprises. He owns factories for the
manufacture of cellulose and paper, and
has acquired various cellulose factories at
the headquarters for the raw material in
East Prussia. It is interesting to observe
that he has, at the same time, made use of
his coal companies in order to make sure
of having an uninterrupted supply of coal
from the Ruhr basin for these factories in
East Prussia. In the next stage of paper
manufacturing, Stinnes is likewise in a
position to fit his own plants into the
cycle. It is rumored that the Hugo Stinnes
Book and Cellulose Company is seeking to
acquire control in a number of paper fac¬
tories. His acquisition of the large Büx¬
enstein Printing Company of Berlin and
I05
HUGO STINNES
the North German Book Binding and Pub¬
lishing Company, paves the way to the
next step in the paper industry. The whole
enterprise culminates in the newspapers
which Stinnes has already bought. Here
we may again observe the same economic
cycle from the raw product through the
intermediate product to the finished ar¬
ticle, all under the same uniform adminis¬
tration, as in the case of the other enter¬
prises of the Stinnes Trust.
The business efficiency of Stinnes makes
it seem probable that he will also attempt
to bring his newspapers to the highest
possible stage of technical and administra¬
tive perfection. Nevertheless the Deutsche
Allgemeine Zeitung is still far from being a
journal of distinction, comparable let us
say, to the French Matin. It also lacks
the millions of readers who support news¬
papers of such world - wide circulation.
Judged from appearances only, it is true, the
Deutsche Allgemeine Zeitung is the greatest
106
HUGO STINNES
German newspaper. But the modest cir¬
culation among small officials which this
fussy little paper formerly enjoyed, as well
as under the excellent management of the
deceased Mr. Hobbing, has remained the
same. Editorial offices and experts value it
as before for its information service, but
the paper has no influence on any larger
sections of the public. With all his news¬
paper purchases, Stinnes is still far from
being a Lord Northcliffe, and probably has
no intention of becoming one.
The report that Stinnes has already pur¬
chased sixty German papers seems to be
largely exaggerated. The number probably
does not exceed a dozen or so.
The danger of a trustification of the press
certainly has possibilities which must not
be underestimated. Powerful personalities
might easily use their economic control of
the press in order to sway public opinion in
certain definite directions, and to misuse
their influence. It is a matter for legisla-
107
HUGO STINNES
tion to be beforehand in checking the
dangers that might result from such a
trustification, with its attendant conceal¬
ment of the nature of the control behind
newspapers.
CHAPTER IX
STINNES IN THE PUBLIC EYE
Since the war, Germany has had to fight
for its very existence. This struggle is
taking place primarily in the field of eco¬
nomics. Formerly, losing a war entailed the
loss of territory or the complete loss of po¬
litical independence, whereas to-day the
consequences of such a war are a confisca¬
tion of goods; these goods are either taken
out of the defeated country in the form of
raw materials or finished products, or else
the same result is accomplished by curtail¬
ing the conquered country’s share in the
world’s trade and commerce, in favor of the
victors.
For a long time the coal question re¬
mained in the foreground of the peace ne¬
gotiations. France had lost enormous quan-
109
HUGO STINNES
tities of this important raw material through
the war. It will take years before the
French coal mines can be brought back to
their former output. This explains why
France was so interested in putting the de¬
mand for German coal deliveries into the
forefront of the discussion. But even a
half-way informed opponent must have
recognized the absolute impossibility of
meeting the demand for the enormous
amount of almost 40,000,000 tons of coal,
as stipulated in the treaty of peace. At the
time not even a quarter of this amount
could be delivered. It is true that the out¬
put of coal from the Ruhr basin increased
considerably in 1919 and 1920. But it was
still insufficient to supply German industry
with the necessary fuel.
The hostile powers saw that Germany
could not be compelled to deliver the
amount of coal demanded, by means of any
peremptory command. Since the days of
San Remo, they seemed to realize that the
only possible way of arriving at a real repar-
110
HUGO STINNES
ation programme was by resorting to nego¬
tiations. There followed the conference at
Spa, which began with a fair prospect of
arriving at a European understanding,
though this promise ultimately failed to
be realized.
The negotiations took place in the Villa
Fraineuse, the former seat of the imperial
headquarters. The French delegates seemed
unable to dispense with the florid rhetoric
which characterizes so many French po¬
litical utterances. The German delegates
were in an extraordinarily difficult position.
The amount of coal demanded of them was
so large that they did not wish to take the
responsibility of accepting it without fur¬
ther authorization. They therefore sum¬
moned the German experts to Spa in order
to hear their opinions. Hugo Stinnes was
accordingly summoned to Spa to testify as
an expert.
Opinion among the German delegates
was divided. On the one hand they were
threatened with the occupation of the
HUGO STINNES
Ruhr basin, but on the other hand, they
were frightened by the prospect for Ger¬
man industry which such an exhaustion of
Germany’s raw materials seemed to open
up before them. Hugo Stinnes anticipated
such catastrophic results from accepting
the demand of the Entente, that he used
the entire force of his personality and his
prestige as an expert to insist upon a re¬
fusal. The delegates decided to let Stinnes
present his arguments personally, at a
plenary sitting of the conference. Mr.
Hue, representing the German miners, was
also present as an expert, and was equally
convinced of the serious consequences of the
loss of coal to Germany, and appeared before
the conference at this same sitting as the
representative of the German coal miners
in order to state the grounds for his adverse
opinion.
Stinnes insisted that it would be abso¬
lutely impossible to make an annual de¬
livery of 40,000,000 tons. He recognized
the pressing need of France for reparation
HUGO STINNES
coal, but considered that even the prelim¬
inary delivery of 2,000,000 tons per month
could not be carried out for the present. A
few days before, he had already made a
similar declaration to a representative of
the French press. In this interview, he
stated that he considered the Spa confer¬
ence to be premature, and likely to turn
out a failure for both parties concerned.
He was in favor of allowing these economic
and social questions to mature for several
months, believing that many of them would
ultimately solve themselves. He further
believed that Germany would, in the course
of time, be able to increase its labor effi¬
ciency, and that it was ready at any time
for international cooperation.
Stinnes referred particularly to the possi¬
bility of cooperation between France and
Germany. The fact that the two countries
were adjacent was a direct invitation to
carry out the necessary reconstruction to¬
gether, and to satisfy their economic needs
on the basis of mutual understanding. But
HUGO STINNES
he looked upon Spa as still enveloped in
an atmosphere of mutual suspicion.
The arguments of Stinnes before the con¬
ference were heard with the greatest at¬
tention. The delegates saw before them the
representative of German industry, who re¬
jected the gestures of diplomacy and dealt
with sharp-edged realities. The speech of
Mr. Hue strengthened this impression.
These speeches marked a departure in the
proceedings of these political negotiations.
The momentary effect, it is true, was not
very great. The guiding stars of the French
and English statesmen were not economic
but political. It was made evident that a
memorandum or an expert opinion, no mat¬
ter how carefully and thoroughly composed,
makes little impression upon men of the
stamp of Briand and Lloyd George, who
are even likely to dismiss it without fur¬
ther consideration. This method of pre¬
senting the German arguments was out of
place, at least as far as any immediate
results are to be expected.
HUGO STINNES
Mr. John Maynard Keynes, the English
expert, was entirely right in his pessimism
about Spa. He expected no insight from
Spa that would do justice to the realities of
the situation. At the time of the confer¬
ence at Spa, the coal question was no
longer an economic issue, as far as the
French delegate was concerned, but a polit¬
ical one. If Millerand had failed to satisfy
the French public, his political career would
have ended. England on the other hand,
having in mind certain political steps in
Asia Minor, for which it was necessary to
gain French approval, was compelled to
hold back from any practical discussion.
The demands of France were put through
to the accompaniment of the military
threats of Marshal Foch.
The utterly impractical nature of the
reparation negotiations is revealed by the
fact that France already has an over¬
supply of coal, despite the fact that the
German coal deliveries are far from reach¬
ing the amount demanded at Spa. At the
115
HUGO STINNES
same time, the reconstruction work is being
held up. A distribution of German effort,
so as to meet the actual varied require¬
ments of France, would not have hampered
Germany as much as these coal deliveries,
and would have been of much greater
benefit to France. The French economic
body just now resembles an organism which
has been stuffed to the bursting point with
undigestible nourishment.
The attitude of Hugo Stinnes at Spa
was afterwards sharply criticized in Ger¬
many. He was accused of having made
such a curt refusal with the deliberate in¬
tention of bringing about the occupation
of the Ruhr basin. It was alleged that
this would have meant no diminution of
his profits. It was also hinted that he
wanted the Ruhr basin to be in French
hands, in order to escape the German
socialization schemes. The answer to this
is that Stinnes certainly could have found
other and less dangerous alternatives if his
actions had really been determined by mere
n6
HUGO STINNES
considerations of profit or the fear of social¬
ization. At the same time it must be said
that Stinnes seemed to be of the opinion
that the French would in the course of
time undoubtedly find some excuse for oc¬
cupying the Ruhr basin. As he explained
later in justifying his conduct at Spa, he
considered that the results would have
been less harmful for the future of Germany
if the occupation had taken place immedi¬
ately at the time of the Spa conference,
rather than now or later.
The conference at Spa was preceded by
an interview between Stinnes and Miller-
and. The foreign press reported that
Stinnes had outlined a plan of close co¬
operation between the French and German
coal and iron industries, which was to be
of the greatest importance in the upbuilding
of German economic life. His plan was
supposed to have been worked out to the
most minute detail. It was said to have
made a strong impression in France, but
that the French industrial leaders had op-
117
HUGO STINNES
posed Stinnes’ proposal. It was probably
feared that such a cooperation would work
out to the detriment of French industry
on account of the superior organization of
German industries.
The pessimistic calculations of Stinnes
in regard to the coal deliveries have turned
out to be untrue. The figures were prob¬
ably correct, but evolution has shown that
a vital organism is elastic enough to form
new growths where the old growth has
been cut off. Nevertheless it is true that
the experiment was never carried out ac¬
cording to the figures which Stinnes had
in mind. The insufficient output, despite
extra shifts, subsidies, and an increased
number of laborers, on Germany’s part,
and the transportation difficulties of France,
have made it impossible to carry out com¬
pletely the agreement at Spa.
The common sense harmony between
employers and employees revealed at Spa,
made a deep impression upon the public
both in Germany and abroad. But the
118
HUGO STINNES
effect of this soon disappeared in Ger¬
many, when political and labor dissensions
broke out with unprecedented severity im¬
mediately after the occurrences at Spa.
The attacks upon Stinnes came thick and
fast. Among other things, he was accused
of seeking to acquire influence in France
in order to limit German prerogatives in
the Ruhr basin, and to split labor by means
of his newspapers. A letter which Hugo
Stinnes wrote to one of the men who at¬
tacked him, is of considerable interest. In
July, 1920, he wrote as follows:
“I find that you have made certain
prominent statements in the Arbeiterzeitung 1
of Essen to which I am replying because
they have been made by a man who is a
member of our own mining industry, and
because these statements, unless they are
contradicted, are likely to cause mischief
in our mining community. The experts
of the coal industry, present at Spa, had
1 A newspaper devoted to the interests of labor published in
Essen.
9 119
HUGO STINNES
two objects in mind when they made their
fight to keep the compulsory deliveries of
coal to the hostile Entente within certain
limits. They wanted first to save the Ger¬
man mining unions from having to do a
great amount of overtime work at a period
when their food supply was inadequate.
In the second place they did not want the
unions to assume the responsibility for an
even greater increase of unemployment and
want in all other industries.
In the discussions of the socialization
commission, and in the committee of the
State Economic Council, I called particu¬
lar attention to the fact that, contrary to
many of my associates, I did not take the
stand that the abolition of the eight-hour
day could be looked upon as a cure-all to
remedy the present depression within what
might be called a reasonable time. It is
therefore outrageous of you to accuse me
of having taken the opposite position. The
only correct statement you make is that I
declared that overtime work was essential
120
HUGO STINNES
to change the present conditions in the
departments of mining, agriculture, and
transportation. What you say about a
French-German Purchasing Company, in
Paris, in which I am supposed to be heavily
interested, is either a careless or a deliberate
misrepresentation on your part. For it
has been constantly emphasized that only
the German unions and the Coal Syndicate
were to benefit from this French-German
Purchasing Company. This was again
brought out at the recent congress of
mining unions. If it is your intention to
create a dissension and suspicion between
employers and employees in the coal mining
industry, whether through ignorance of the
facts, or deliberately, you are merely fur¬
thering the interests of our common op¬
pressors, with the result that the Rhine-
Westphalian miners will have to drudge
like slaves for foreign masters for years to
come, to the great detriment of Germany.
You will thus do the same harm as a num¬
ber of our representatives at Spa, who
1 21
HUGO STINNES
through racial bias, broke down German
resistance against degrading demands. I
hope that you will see to it that my reply
to your statements is conspicuously printed
in the Arbeiterzeitung. Good luck to you!”
Hugo Stinnes had every right to repudi¬
ate such suspicions. An expert called in
to give his opinion must be allowed to state
his case frankly, without being suspected of
bad motives. On this occasion, it is true,
Stinnes exposed himself by ascribing mo¬
tives inspired by racial bias to other ex¬
perts who did not share his point of view.
Perhaps he wanted to defend himself against
the impression which a French newspaper
had created, by describing Stinnes as hav¬
ing a Semitic appearance. On this occasion
Stinnes had been characterized as “half a
professor, half a rabbi.” In any case,
Stinnes’ attack upon his associates at Spa
was most unfortunate.
Since Spa, Stinnes has been especially
down on politicians. After the negotia¬
tions at the London Conference, he made a
122
HUGO STINNES
sharp attack upon the German conduct of
the negotiations, in the Committee on
Foreign Affairs of the German parliament.
He reproached the Cabinet for having a
foreign policy that was without any guid¬
ing idea or fixed plan. Lately, an interview
of Stinnes has been republished, which he
is supposed to have given to a foreign
correspondent.
“We are merely losing time through the
chatter of politicians who are wound up
like automatons by parliament and the
newspapers. What we need is a conference
of business men who can talk to each other
without hate. There must be no more con¬
ferences at which everybody lays down his
revolver at his side. This sick world can
only be saved by a consultation of a few
physicians behind closed doors. It would
be insane on the part of Germany to de¬
clare its willingness to pay even the in¬
terest on a loan of 50,000,000,000 marks.
If the Allies are figuring on any such sums,
they are going to have another disappoint-
123
HUGO STINNES
ment. France could have had material
and labor for construction two years ago,
and no German would have refused to de¬
liver them. France, however, was not
really interested in reparation, but was
seeking to humiliate Germany. At the
present moment there are only two kinds of
countries in the world — those which can
buy raw materials because of the state of
exchange, and those which can not do this.
Both are bound to perish unless some form
of cooperation can be agreed upon. Money
is to be found, but only by giving the world
an example of perfect cooperation. Every
business man knows that money is to be
had, only the politicians do not seem to
know it. I am trying to save my country
from destruction, and at the same time save
the other countries.”
This interview is without doubt essen¬
tially correct. For this is the way Stinnes
thinks and speaks. He is always terse and
sure of himself, and sees things in a large
way, though he is sometimes a little reek-
124
HUGO STINNES
less. It is certain that Stinnes will make
use of his whole organizing power to solve
European problems when the time comes.
It is not like him to stand aside and sulk.
As a party man, Stinnes belongs to the
German People’s Party (Volkspartei). The
party seems to have entertained the hope
that this powerful trust magnate would
make a strong foundation for a political
platform. These expectations have not
been realized. Hugo Stinnes seems to have
no desire to substitute a form of narrowly
conceived and unprofitable party politics
for his industrial activity.
Stinnes has lately been severely taken
to task for launching three ships which
were christened with somewhat opprobri¬
ous names. To call these three ships
“Hindenburg,” “Tirpitz,” and “Luden-
dorff,” was looked upon as a provocation,
though it is not likely that this idea ever
entered his mind. For the construction of
these ships had been begun at a period
when these three names still sounded differ-
125
HUGO STINNES
cntly to Germans, than they now do. The
three men in question had probably agreed
to act as godfathers for the ships some time
ago. It would have been very surprising
if a man like Stinnes had allowed any psy¬
chological or tactical considerations to in¬
fluence him to change the names of the
ships at the last moment.
CHAPTER X
STINNES AND THE SOCIALIZATION OF INDUS¬
TRIES
Coal and iron are the foundations of Ger¬
man industry. He who controls them con¬
trols the smallest business. By producing,
manufacturing, and exporting them, Ger¬
many can exchange goods with the indus¬
tries of the world; she can satisfy her own
needs and make enough profit to increase
and improve the supply; she can put her
factories into more and more perfect con¬
dition. Mr. Vogler, one of the directors of
the Stinnes Trust, is quite right when he
says: “With us the potato has long ago be¬
come a product of coal.”
For this reason the question of creating
new economic systems always involves the
control of coal and iron. Newspapers, pub-
127
HUGO STINNES
lie meetings, and commissions have long
been engrossed in plans for the develop¬
ment of these new systems. Germany was
the first country to create a State Economic
Council, a parliamentary institution cre¬
ated for the purpose of taking economic
questions out of the hands of politically
divided parties, and giving them to com¬
petent representatives of the various trades
and professions to evolve some suitable
working basis.
In the State Economic Council, repre¬
sentatives of every occupation come to¬
gether for practical work on these economic
questions. After the events at Spa in 1920,
the question of socializing the mines was
exhaustively discussed. The records of the
proceedings read like an exciting drama
which shows the conflict of opinions and
interests on a broad stage, not without an
occasional bit of satire.
In the debate over the socialization of
the mines, there was found to be a sharp
conflict of opinion. Hugo Stinnes, who
HUGO STINNES'
belongs to the State Economic Council,
took an active part in the discussions.
When the first negotiations failed to estab¬
lish a common basis, the so-called “Com¬
mittee of Understanding” was formed,
which proceeded from Berlin to Essen, into
the heart of the coal district, in order to
arrive at some practical results. Besides
Stinnes and Vogler, this committee in¬
cluded a number of other employers and
employees from the various branches of
the coal industry, and the series of fac¬
tories belonging to the next stage of manu¬
facturing. This meeting at Essen resulted
in an expert’s memorandum which was
essentially the work of Stinnes. The other
large industrial leaders of German indus¬
tries subscribe to the collectivist point of
view contained in this memorandum. As
we cannot digress too far into the details of
these proposals, we shall limit ourselves to
elaborating upon the two most important
ones.
The memorandum declares itself in favor
129
HUGO STINNES
of creating vertical consolidations of the
industry. The object is to utilize the raw
materials to the greatest possible extent,
and to manufacture them into finished
products as efficiently as possible. When
these various vertical combinations within
the industry have brought about the great¬
est possible economic concentration, they
are to be organized in relation to each
other on the horizontal system. The whole
industry will then be trustified both ver¬
tically and horizontally into a collective
unit. This will ensure the maximum serv¬
ice, and will thus fulfill one of the main
demands of socialistic organization. Ac¬
cording to Stinnes, trustification and social¬
ization run parallel, and do not have to
intersect each other. The second proposal
is to create industrial provinces. The eco¬
nomic field is to be divided, not according
to geographical and political relations, but
strictly according to a practical economic
point of view. Within every uniform dis¬
trict there will be a combination of all
130
HUGO STINNES
the branches of industry, and a joint regu¬
lation of power production, raw material
output, and manufacturing, together with
the necessary transportation facilities. In
forming these industrial provinces, Stinnes
is developing a plan which he had already
tried to put into practice before the war.
Both his mining establishments in the Ruhr
district, and his development of the elec¬
trical business, had been planned with the
idea of creating a uniform industrial dis¬
trict. To carry out this form of collec¬
tivism, Stinnes also proposes to have the
employees hold shares in the industry.
These lines of development have been
evolved from practical experience, and fol¬
low out the purpose which Stinnes had in
mind in establishing his enterprises and
consolidating the various branches into his
Trust. The importance of these consoli¬
dations for the economic development of
Germany is indisputable. The proposal
of minor stock participation is not essen¬
tial to the development of collectivism,
HUGO STINNES
and may even become an impediment. The
participation of the individual employee
in the enterprises would merely strengthen
economic individualism. Other business
men demanded the participation of the
employees as a form of collectivism.
Socialization itself has thus far made little
progress. The great unknown quantities,
which the unsolved reparations problem
has called forth, must first be eliminated
from world economics. No amount of
negotiation so far has even succeeded in
reducing these quantities to practical di¬
mensions.
Until this is done it is not very likely
that a transformation of the present-day
economic system can be accomplished
through legislation. In this connection, it
is interesting to hear the opinion of French
Socialists about the economic system which
Stinnes has created. A short time ago
Le Peuple pointed out how this concentra¬
tion had cheapened production and avoided
the waste of raw material, and referred to
132
HUGO STINNES
this form of organization as “a step which
France might well imitate.” French in¬
dustry, this newspaper continued, had found
nothing better to do than to raise the
tariff. This merely stunted business initi¬
ative and diminished competition in world
economics, whereas these German concen¬
trations had not only proved that produc¬
tion methods could be improved but had
shown how such improvements could be
made.
CHAPTER XI
THE SIGNIFICANCE OF STINNES IN GERMAN
ECONOMIC DEVELOPMENT
There is no doubt about the strength of
Stinnes’ personality. But it is equally cer¬
tain that from an economic point of view
he is rapidly growing beyond a mere per¬
sonality: he is becoming his own work.
The Stinnes Trust serves as a model il¬
lustration of German trustification. This
differs in many ways from the well-known
American trust, in respect to its ori¬
gins, its development, and its results. The
untapped natural resources of America of¬
fered unprecedented opportunities for profit
to the trusts. In Germany, on the other
hand, there were already large numbers of
independent business men who had sprung
134
HUGO STINNES
up as a result of the division and utilization
of the country’s deposits of raw materials,
and the advanced technical development;
so that a trust could not be formed except
through a combination of individual daring
and an extraordinary gift for organization.
American trust builders also have frequently
made clever use of the stock exchange opera¬
tions, in order to gain control of various
enterprises. Large scale speculations of
this sort have been rare occurrences in Ger¬
many. It is only quite recently that the
stock exchanges of Berlin and Vienna have
witnessed such sensational operations. They
will cease as soon as the exchange has been
stabilized.
The German concentration movement
did not take place primarily through finan¬
cial operations, but through logical con¬
solidations of enterprises that were at the
same stage of manufacture, or were engaged
in similar manufacturing processes. Such
consolidations offered great advantages in
the running of the business, which did not
10 135
HUGO STINNES
exist in the case of isolated enterprises.
They led to economy and skill in the pur¬
chase of raw materials, and where they
were built up on the basis of their own raw
materials, this feature frequently put them
in the favorable position of being able to
procure their material without expensive
middle-men’s costs, and without time-rob¬
bing and costly transportation. They could
also regulate the production of raw ma¬
terials according to whatever standard of
quality they required.
The special forms of industrial organiza¬
tions peculiar to mining were to the advan¬
tage of factories that handled several proc¬
esses at different stages. The protracted
dissensions in the Rhine-Westphalian Coal
Syndicate had resulted from the fact that
a large number of mining industries, as
well as factories involving several processes,
were members of the same syndicates and
cartels. The cartel form of business or¬
ganization will probably disappear entirely.
An essential difference between German
136
HUGO STINNES
and American trusts also lies in the fact,
that in America the domination of the trust
in most cases led to the complete control of
an entire industrial field. Thus the all-
powerful Standard Oil Company, whose
history is associated with the name of
Rockefeller, completely dominated the
American oil industry within the short
space of ten years after it had absorbed
39 competing companies. At one time it
transported and distributed 95% of the
entire American production. Germany had
no such example of monopoly because a
number of equally powerful trusts grew up
within the same branch of industry. When
the period of consolidation approached,
German industry had numerous large enter¬
prises with a highly developed individu¬
ality. At present, the mining industry
alone includes a number of large firms. So
far no single trust dominates. As a result
the head of every trust is stimulated to
make a maximum effort. No mining trust
can afford to rely upon its powerful posi-
13 7
HUGO STINNES
tion, and to let up in its effort to perfect
its equipment and to increase its produc¬
tion. This continually forces German trusts
to do everything in their power to try to
cheapen production costs and to extract
the maximum effort from their workmen.
Another trait of the German trusts is
the principle of federation basis on which
they are organized, corresponding to the
characteristics of the German people. As
the Stinnes Trust shows, decentralization
is the very thing aimed at, so as to preserve
and increase the independence of the in¬
dividual enterprises and the pride of each
director in his responsibility, as well as to
avoid stagnation in the office management
and in the shop.
Germany to-day shows the most diversi¬
fied forms of consolidations in every field.
But they all have the same object in com¬
mon, namely, to organize industry on a
more rational basis. This is essential in
order to keep Germany alive. The fact
that this process is taking place from within
138
HUGO STINNES
is a sign of inner vitality. To what this
development will lead later on, cannot yet
be foreseen. Theories differ in regard to
the efficiency of these concentrations. The
dispute between the partisans of these
theories frequently takes violent forms.
But in the meantime the development goes
steadily on. Germany must of course pre¬
vent unhealthy excrescences of this de¬
velopment. But the development itself is
bound to take place.
The importance of German trusts for
the future of Germany is certainly very
great. So-called normal economic condi¬
tions, in the period before the war, now
seem almost mediaeval and provincial. The
development is taking place with enormous
rapidity. The pressure of conditions from
without, the actual or threatened loss of
vital industrial sections, and the prohibi¬
tion of export and import, would necessarily
have destroyed Germany if unsuspected
forces had not been liberated and been
made to unfold from within. Germany
139
HUGO STINNES
will become a sparsely settled agricultural
state unless the formation of new kinds of
economic organization can bring about
greater, better, and cheaper production.
Trusts induce and facilitate the growth of
these new economic organizations. It is
worth while to observe the effects of trusti¬
fication in the case of the Stinnes Trust.
The consolidation of the Gelsenkirchen
Mining Company Inc. with the German-
Luxemburg Mining & Smelting Company
and the Bochum Company, combines a
large number of similar plants engaged in
the production of coal, iron-ore, limestone,
and dolomite. These raw materials are ex¬
tracted not only for the factories belonging
to the trust, but to a considerable extent
for outside factories as well. This com¬
bination makes it possible to employ cheaper
and better methods of extraction because
the joint management eliminates competi¬
tion, and facilitates a better organized plan
of distribution. The expenses of the Trust
are also reduced through the manufacture
140
HUGO STINNES
of its own raw materials. The factories are
thereby put in a position to invest much
more money in new enterprises where the
results may be doubtful, than isolated
establishments which operate much closer
to the profit and loss margin. Innovations
of a technical nature can also be introduced
with much less risk.
The by-products and intermediary prod¬
ucts of the mining industry can be utilized
to the greatest advantage. Here also the
history of the Stinnes Trust shows that a
number of technical innovations were made
possible only by distributing the risk of the
experiment over the individual factories.
By-products such as coke and lime can be
manufactured in the company’s own fac¬
tories in any grade or quality desired. The
Trust can obtain all the necessary materials
for the production of pig iron from its own
plants, and the smelting takes place in its
own establishments. Steel of every grade,
cast-iron, blast furnace cement, and slag
stones, are all produced according to the
141
HUGO STINNES
needs of the factories at the next stages of
manufacture.
Semi-manufactured products of every
form and quality are successively produced
by a chain of related factories. The estab¬
lishments at Gelsenkirchen produce rail¬
road material, bar iron, tin, and tubing;
the Bochum Company manufactures rail¬
road material, forged iron, bar iron, and
cast iron. The Brüninghaus factories pro¬
duce crude forged iron and bar iron; the
former works at Thomee produce bar iron
and rolled steel wire. The former inde¬
pendent works at Berg manufacture bar
iron, various forms of tin, wire, and tubing;
the German-Luxemburg Mining & Smelting
Company manufactures railroad material,
forged iron, cast-iron, tins and wires. The
affiliated factories of the Siemens Company
also produce bar iron and wire.
The finished products of the German-
Luxemburg Company include all kinds of
tools, screws and rivets, springs, forged
parts, switches, railroad and bridge con-
142
HUGO STINNES
struction material, cranes, cables, railroad
and street cars, freight cars, machines and
ships. The Company obtains all its neces¬
sary materials for these manufacturing
processes from the series of factories en¬
gaged in the production of intermediary
products. The Bochum Company depends
upon previous production stages of the in¬
dustry for its manufacture of forgings and
railroad material.
This foundation of raw material, semi-
and finished product, serves the Siemens
Company for the manufacture of the most
varied articles. These include: generators,
motors, transformers, switchboards, ma¬
terial for installations, cables and conduits,
telegraph and telephone apparatus, signal
apparatus, measuring instruments, electro-
medial apparatus, hydrometers, railroad
safety devices, trucks and automobiles,
artificial coal, porcelain and paper for tech¬
nical purposes, incandescent lamps, elec¬
trical distributing stations, electrical equip¬
ment for industrial power plants, for elec-
143
HUGO STINNES
trical transportation, and for chemical in¬
dustries; long distance telephone apparatus
and transmission equipment, signal and
switchboard equipment, and underground
and hydraulic building material.
Beginning at the bottom of the scale,
every stage of manufacture is undertaken
in relation to the stage next above, so that
the raw material is gradually transformed
into a finished product of the best possible
quality. Whenever changes in the finished
product are called for, suitably equipped
factories can be installed at any of the pre¬
liminary stages of manufacture.
The divisions in this system are not
rigid. Horizontal and vertical combina¬
tions parallel and intersect each other.
Many industries are divided vertically or
horizontally within themselves, and some
are connected with others both horizon¬
tally and vertically. Every stage of manu¬
facture, besides having its place in the pro¬
duction scale as a whole, is itself minutely
organized. This rational systematizing of
144
HUGO STINNES
factories will undoubtedly be developed
still further. This combination is of especial
importance in the case of factories that
are connected in a series. The horizontal
division, which economic experts have been
insisting upon, is therefore already fore¬
shadowed in the Stinnes Trust, and will
probably be further developed.
Stinnes is generally regarded as the
strongest exponent of the vertical trust.
The most recent developments show that
even those industrial leaders who formerly
were the strongest opponents of vertical
trusts can no longer get along without the
expansion of their enterprises both upward
and downward in the scale of production.
A combination of the vertical and the
horizontal systems will probably take place
to a very great extent in the near future.
The Stinnes Trust has been very much
attacked. In most cases the attack is not
against Stinnes himself but against the form
of trustification, so that it also applies to
other large trusts which are being formed
145
HUGO STINNES
in Germany. The point is being made that
the development of these trusts is not
organic but is due to the tremendous pres¬
sure of external circumstances. In case of
a return to a period of normal economic
activity in the future, it is considered very
dangerous to have these trusts absorb a
large number of major and minor indus¬
tries which they will no longer be able to
utilize when conditions are stablized again.
But after the factories are either aban¬
doned or closed down, it will still be nec¬
essary to pay off both interest and prin¬
cipal on the large amounts of capital in¬
vested. This necessity will form an un¬
desirable liability which must be charged
against prices. The same reasoning ap¬
plies to the overpayments which are often
being made to-day in acquiring new prop¬
erties. These liabilities will prevent price
reduction, and will finally be passed on to
the consumer, so that the people as a whole
will suffer economic harm.
It is also claimed that there is great
146
HUGO STINNES
danger of the owners of these powerful
trusts misusing their influence over society
and the state. It may become especially
difficult to regulate the production of in¬
dividual countries in the interest of inter¬
national economic understanding, if these
countries contain powerful, independent
pyramids which stand outside of the
commonwealth.
Finally it is argued that these trusts
make it impossible for important smaller
industries to remain independent, and that
they check the initiative of the masses.
These misgivings are not entirely un¬
justified. In addition, the trustification
movement has thus far failed to give one
other necessary guarantee. Trusts will, it
is true, lead to the greatest possible ration¬
alization of economics, but it has not yet
been shown that these factory systems,
however technically perfect they may be,
are working towards a true collectivism.
Of what use is it to the general public, for
instance, to have the best telephone system,
147
HUGO STINNES
if such necessities as houses, clothes, and food
cannot be procured in sufficient quantities,
or only at exorbitant prices ? And it is also
true that, up to now, every advance towards
a better supply of these necessities is made
retroactive through the fact that increased
satisfaction constantly creates new wants.
Thus, the economic pressure persists even
when it is possible to satisfy all wants.
As regards the relative merits of vertical
or horizontal concentration, this at least
seems to be certain: Under the desperate
conditions of present day German indus¬
try, the vertical trust is the most important
for the near future. The merit of the hori¬
zontal system lies in its internal results.
This system may be compared to a com¬
munity with an economic system which
allows the most suitable distribution of
labor and avoids every form of industrial
friction and waste of material, while at the
same time enjoying unrestricted relations
with the outer world. But Germany to¬
day cannot revive her industry by satisfy-
148
HUGO STINNES
ing, however perfectly and smoothly, only
her own wants. She must have free inter¬
course with the world. The German eco¬
nomic organism is crippled and will not be
able to maintain itself through the coming
periods of economic crises and struggles
for supremacy, unless it can secure points
of support and sources of food supply out¬
side of its own borders. Only a vertical
trust like that of Stinnes can create points
of support for itself in the endangered
districts and in foreign countries. If ten
similar establishments, operating at the
same stage of manufacture, join with an
eleventh similar establishment in a foreign
country, they cannot accomplish their eco¬
nomic function through the agency of this
one establishment, in times of political and
economic uncertainty. But a trust that is
linked with the production of raw materi¬
als and is sure of disposing of its goods will
be able to retain its strength in a crisis,
and will even be able to engage in new forms
of activity in the face of powerful obstacles.
149
HUGO STINNES
If we direct our attention to the anchor¬
ages of the Stinnes trust, such as Rhine-
land-Westphalia, Hamburg, Berlin, Bava¬
ria, East Prussia, and German Austria,
and follow out all their foreign connections,
we shall find that they offer valuable guar¬
antees of their ability to function even in
periods of political and economic upheavals.
If the German commonwealth succeeds in
organically incorporating this powerful trust
into its own economic structure, Hugo
Stinnes will be one of the commonwealth’s
strongest pillars.
Date Due
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DATE
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